Fraudulent COVID-19 Loans Sent to Collections Impacting Credit Scores of Unsuspecting Individuals
The federal government is sending fraudulent COVID-19 relief loans, specifically for the amount of $20,833, to collections, severely damaging the credit scores of individuals who never applied for them. These loans, primarily from the Paycheck Protection Program (PPP), were transferred by the U.S. Small Business Administration (SBA) to the federal Treasury Department in June, which then forwarded them to collection agencies. Victims like Donna Zimmerman and Dr. Paul Carpenter in Rochester, New York, are receiving collection notices for loans they never sought, with their credit scores plummeting significantly. Zimmerman, who never owned a business, received two such notices totaling over $50,000. Carpenter's credit score dropped from the 800s to the 600s. The $20,833 amount was the maximum loan for a single-employee business, requiring minimal documentation, making it a prime target for fraud. The government estimates hundreds of thousands of such fraudulent loans exist. 
