FRAUD_PRONE_INDUSTRY_ANALYSIS
├─ ppp_database 11,467,710 loans
├─ industries_tracked 18
├─ loans_in_tracked 1,811,751
├─ total_funding $75.08B
├─ critical_industries 2
├─ flagged_loans 899
└─ flagged_value $207.1M
What is this
Comprehensive analysis of 11,467,710 PPP loans across 18 fraud-prone industries. These NAICS codes appear disproportionately in DOJ prosecutions and OIG reports. Industries with high cash volumes, employee turnover, and limited documentation face elevated fraud risk.
Critical Risk Industries (2)
Industries with >0.5% flag rate or >100 flagged loans require priority investigation.
Industry Breakdown
| NAICS | Industry | Loans | Total Amount | Avg Loan | Flagged | Flag Rate | Risk |
|---|---|---|---|---|---|---|---|
| 624410 | Child Day Care Services | 128,929 | $5.58B | $43K | 349 | 0.27% | CRITICAL |
| 722511 | Full-Service Restaurants | 326,442 | $26.01B | $80K | 251 | 0.08% | CRITICAL |
| 722513 | Limited-Service Restaurants | 136,540 | $9.57B | $70K | 76 | 0.06% | HIGH |
| 721110 | Hotels and Motels | 81,976 | $10.06B | $123K | 73 | 0.09% | HIGH |
| 812112 | Beauty Salons | 458,385 | $6.22B | $14K | 45 | 0.01% | MED |
| 811111 | General Auto Repair | 93,545 | $3.87B | $41K | 34 | 0.04% | MED |
| 722410 | Drinking Places (Alcoholic Beverages) | 46,379 | $3.04B | $66K | 28 | 0.06% | MED |
| 445120 | Convenience Stores | 29,880 | $980.9M | $33K | 9 | 0.03% | HIGH |
| 485320 | Limousine Service | 27,196 | $877.2M | $32K | 8 | 0.03% | MED |
| 812111 | Barber Shops | 123,712 | $1.94B | $16K | 6 | 0.00% | MED |
| 447110 | Gas Stations with Convenience Stores | 44,947 | $2.21B | $49K | 5 | 0.01% | HIGH |
| 812320 | Dry Cleaning and Laundry Services | 28,402 | $1.35B | $47K | 5 | 0.02% | MED |
| 453991 | Tobacco Stores | 8,156 | $231.1M | $28K | 5 | 0.06% | HIGH |
| 812310 | Coin-Operated Laundries | 8,960 | $209.8M | $23K | 2 | 0.02% | MED |
| 485310 | Taxi and Rideshare Services | 250,823 | $1.92B | $8K | 1 | 0.00% | HIGH |
| 453310 | Used Merchandise Stores | 12,150 | $579.9M | $48K | 1 | 0.01% | MED |
| 561422 | Telemarketing Bureaus and Call Centers | 2,090 | $327.5M | $157K | 1 | 0.05% | HIGH |
| 812191 | Diet and Weight Reducing Centers | 3,239 | $94.6M | $29K | 0 | 0.00% | MED |
| Total (18 industries) | 1,811,751 | $75.08B | $41K | 899 | 0.05% | ||
State Breakdown (Focus States)
| State | Childcare | Restaurants | Taxi/Rideshare | Hotels | Salons/Barbers | Total |
|---|---|---|---|---|---|---|
| CA | 13,044 | 58,160 | 30,734 | 8,225 | 60,104 | 170,267 |
| NY | 8,236 | 37,495 | 53,466 | 3,917 | 23,224 | 126,338 |
| FL | 7,184 | 31,101 | 34,446 | 5,696 | 43,521 | 121,948 |
| TX | 9,155 | 32,814 | 14,297 | 7,840 | 49,493 | 113,599 |
| OH | 5,357 | 13,576 | 3,666 | 2,066 | 21,638 | 46,303 |
| WA | 2,437 | 11,193 | 5,267 | 1,720 | 6,174 | 26,791 |
| MN | 4,086 | 7,453 | 2,581 | 1,428 | 7,793 | 23,341 |
Risk Levels
Why these industries
Cash-heavy operations
Restaurants, bars, salons, and gas stations handle significant cash, making payroll inflation easier to hide.
High employee turnover
Industries with seasonal or temporary workers make it difficult to verify employee counts retroactively.
Limited documentation
Small businesses in these sectors often lack formal HR systems and payroll records.
DOJ prosecution patterns
These NAICS codes appear disproportionately in federal fraud prosecutions and OIG reports.
Notable Patterns
Childcare (624410): Highest flagged loan count at 349. Minnesota childcare fraud wave involved systematic abuse of this NAICS code.
Restaurants (722511/722513): Combined 462,982 loans. Cash operations make verification difficult.
Beauty Salons (812112): 458,385 loans with high self-employment rate creates identity verification challenges.
Taxi/Rideshare (485310): 250,823 loans. Gig economy makes employee verification complex.
Methodology
Analysis uses the complete PPP database of 11,467,710 loans.8,538 loans are currently flagged across all industries (0.07% flag rate). Flag rate calculated as percentage of loans with automated fraud indicators including: high dollar-per-employee ratios, round amounts, timing patterns, and matches against prosecuted fraud cases. Industry classification based on self-reported NAICS at time of loan application. State breakdown shows 7 focus states with known fraud concentrations.