Is Fraud Contagious? Social Connections and the Looting of COVID Relief Programs

99 Pages Posted: 13 Oct 2023 Last revised: 27 Dec 2023

See all articles by John M. Griffin

John M. Griffin

University of Texas at Austin - Department of Finance

Samuel Kruger

University of Texas at Austin - Department of Finance

Prateek Mahajan

University of Texas at Austin - Department of Finance

Date Written: December 22, 2023

Abstract

Fraud indicators in the Paycheck Protection Program (PPP) COVID relief program are highly geographically concentrated. Areas with high PPP fraud also have heightened indicators of suspicious Economic Injury Disaster Loan (EIDL) Advances and unemployment insurance claims. Zip codes and counties with high rates of suspicious PPP loans exhibit strong social connections to one another with evidence of fraud spreading over time through social connections. Additionally, individuals in suspicious social media groups have higher rates of PPP fraud, and socially connected zip codes frequently use the same specific FinTech lenders and EIDL agents, consistent with social connections influencing detailed loan decisions.

Keywords: Fraud, Social Media, Government Spending

JEL Classification: G21, G23, G28, H12

Suggested Citation

Griffin, John M. and Kruger, Samuel and Mahajan, Prateek, Is Fraud Contagious? Social Connections and the Looting of COVID Relief Programs (December 22, 2023). Available at SSRN: https://ssrn.com/abstract=4599654 or http://dx.doi.org/10.2139/ssrn.4599654

John M. Griffin (Contact Author)

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-471-6621 (Phone)

HOME PAGE: http://www.jgriffin.info

Samuel Kruger

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States

Prateek Mahajan

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX
United States

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