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Preventing Paycheck Protection Program Loan Scams

The COVID-19 pandemic and subsequent shutdowns have meant perilous times for small businesses across the country, with many shutting down temporarily or even permanently. As part of the U.S. government’s efforts to forestall bankruptcies and layoffs, Congress allocated hundreds of billions of dollars for the Paycheck Protection Program (PPP). Small businesses can apply for loans from the U.S. Small Business Association (SBA), which the SBA will forgive if the receiving business meets certain criteria, like “if all of the company’s employees are kept on the payroll for eight weeks and the money from the loan is used to pay for rent, mortgage interest, utilities or payroll.”

The program has helped many businesses, but also left many stranded and desperate when they could not qualify for the loans. According to the Wall Street Journal, as of this week, the government has disbursed “4.6 million loans worth more than $513 billion.” But some businesses were forced to return the funds when they discovered they could not open soon enough to meet the eight-week deadline, and some did not even bother applying because they did not meet the criteria. The program has also faced criticism for not providing enough funds, and when larger and/or publicly traded companies (like restaurant chain Ruth’s Chris) received loans.

As with many other government programs that award payouts and may have confusing or labyrinthine application and approval processes (such as Social Security payments or tax refunds), scammers have targeted desperate businesses trying to access PPP funds. Online identity verification service Social Catfish recently published guidelines for avoiding PPP-related scams that small businesses are facing, including phishing and robocall scams.

As Risk Management recently reported, phishing scams—in which criminals use fraudulent emails to trick users into clicking malicious links or divulging sensitive personal information—have proliferated since the start of the COVID-19 pandemic, often specifically targeting pandemic-related concerns. According to Social Catfish, online scammers have been using emails posing as the SBA inviting the recipient to apply for a PPP loan, then installing malware or stealing any information provided. With this information, scammers can then pose as a business to apply for loans or steal funds.

Scammers may also try to contact businesses by phone, either in person or by robocall, asking for confidential information or demanding a fee for their PPP application, even promising faster processing after the payment. Similar to the IRS, the SBA does not call PPP applicants for information, and there are no fees associated with PPP applications. Businesses applying for PPP loans may also encounter fake companies claiming that they facilitate applications, which scammers then use to steal the confidential information victims provide.

 To avoid being scammed, Social Catfish recommended that businesses interested in applying for PPP loans do their due diligence by following the steps below:

  • Don’t pay for a PPP Loan application. The SBA doesn’t require payment to fill out and submit a PPP Loan application. If someone is charging you to fill out an application, chances are its a scam.
  • Don’t give your information in response to any suspicious email, text, or phone call. The SBA will not email you out of the blue to fill out a PPP Loan application. If someone is emailing you out of the blue to fill out an application and to give them your information, chances are they are trying to scam you.
  • Verify the lender before applying for the loan. Only lenders approved by the SBA can administer PPP Loans. To find out if the lender you are applying with is approved to distribute PPP Loans, click here.
  • Don’t click on links in emails. The links in the emails are often filled with viruses and malware that will infect your computer and steal your personal information. They also spoof the application so that you’ll have to give out your personal or business’ confidential information.
  • Don’t reply back to any text or email you don’t know. Replying back to them with your personal or company’s confidential information may lead to you getting scammed. The SBA will not email you encouraging you to apply for the loan, you would have to look for the loan yourself.

Curb Phishing Damage with a New, Human Approach to Bad Habits

phishing
In the first quarter of 2016 alone, more than 40 organizations, including Snapchat, Moneytree and Sprouts Farmers Market, acknowledged they were victims of phishing attacks. The attacks came via emails seemingly sent from CEOs to their own human resources and accounting departments. In reality, these emails were sent by cybercriminals attempting to steal vital personal and financial information from companies and their employees.

The FBI estimates that phishing attacks have cost companies more than $2.3 billion in losses over the past three years, and since January 2015 alone, the agency saw a 270 percent increase in identified victims and exposed losses from CEO scams.

Recipients who “take the bait” by responding to a phishing email often provide scammers with all the necessary information to perpetrate identity theft, including filing a tax return in someone else’s name. Clicking a link or opening an attachment may also launch malware-intrusive software and seriously compromise the system by initiating malicious background programs.

The stakes are high and regardless of your organization’s size, you are always at risk for an attack. In fact, the Anti-Phishing Workgroup discovers more than 40,000 unique phishing sites targeting about 500 brands per month, while the Department of Defense and Pentagon report receiving up to 10 million phishing attacks each day.

The success of attacks varies, with 30% to 60% of incidents resulting in victimization, according to a 2013 Verizon Data Breach Report. A phishing attempt’s success or failure, however, rests beyond a scammer’s ability to infiltrate the cybersecurity infrastructure of an enterprise.

Your organization’s susceptibility really comes down to your people. Even with training, vulnerabilities depend on a combination of employees’ awareness levels and enduring personal habits, according to research by University at Buffalo (UB).

Companies can implement more effective cyber preparedness measures only when they better understand the ways that their employees think and behave. As phishing attacks continue to evolve and become more sophisticated, the most successful employee cyber defense strategies should involve two critical components: 1) a combination of cutting edge training and testing and 2) support programs to alter the unconscious human behaviors that compromise cybersecurity.

Currently, most businesses train employees to recognize phishing attempts by identifying key elements in an email message, such as finding the sender’s address, noticing hyperlinks and recognizing clues like typos or awkward language. But research has shown that those efforts fail to sustain positive results because organizational training focuses on situational reactions while ignoring employees’ existing habits, which are difficult to break.

For example, an employee may successfully identify suspicious emails when prompted in a training session. When it comes to an average Monday morning, however, opening every email to clear their inbox may be a strong habit that training simply does not offset. Phishing is largely successful for this precise reason. Perpetrators take advantage of individuals who are habitual in the way they respond, despite any awareness they may have developed or gained in training, according to UB findings.

Many employers complement this basic training with follow-up penetration testing to evaluate whether employees recognize the warning signs of a cybersecurity threat in practice. Organizations may send a mock email with red flags that indicate a potential phishing attack, such as a compelling subject line like “Your computer is at risk.” Once opened, the recipient sees that the message is from the employer with a warning about how similar future messages could pose risks.

Penetration testing, however, doesn’t work in the long run because it also fails to acknowledge habitual actions and attempts to change a person’s behavior by simply encouraging them to do more of the same behavior.

Organizations can actually address the bad habits by identifying employees who are most susceptible to phishing and exposing them to higher levels of education with an emphasis on creating better tailored interventions that address the underlying “why” that drives people to fall prey to phishing time and again.

Continuously testing employees can be helpful; however, a company’s security training program must also attempt to adjust the daily unconscious behavior of employees that puts networks at risk. Companies need to provide their employees with a relatable (non-security/IT) team member/colleague to demonstrate what responsible cyber behavior looks like day in and day out.

One way to accomplish this is to create an internal cyber ambassador program that identifies employees who have proven themselves to have especially strong cyber awareness.

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These employees should be selected from teams such as accounting, sales, HR and administrative support, that are typically vulnerable to phishing attacks.

Cyber ambassadors are responsible for promoting cyber best practices within their own teams. This type of program creates a platooning effect, where employees subconsciously emulate the behavior of their ambassador/team member, resulting in a safer cyber environment.

While employees can be your greatest weakness, they can also be your strongest asset in thwarting phishing attacks. Training employees to identify a phishing attempt—either before or after falling victim to an attack—is only half the battle.

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By better understanding the mechanisms behind employee susceptibility, companies can anticipate individuals most at risk, create dynamic security and training policies that promote safe cyber behavior patterns, and alter employees’ habits through colleague support programs.

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