Identity Theft Tax Refund Fraud
Tax season is officially upon us. It’s time to gather your W-2s, crunch numbers and mail your annual income taxes to Uncle Sam. It’s also time to learn about the number one fraud of the season: identity theft tax refund fraud. Understanding how cyber criminals pull it off and what the consequences are for victims can help protect yourself.
Identity theft tax refund fraud occurs when someone uses another person’s Social Security number to file a tax return in the hopes of attaining a fraudulent refund. The odds of getting away with it are good, if the victim hasn’t yet filed their taxes, which is one good reason to file your taxes early.
How cyber criminals pull off the fraud
Virtually every organization acquires, uses, and stores personally identifiable information (PII). Businesses are expected to manage this private data appropriately and take every precaution to protect it from loss, unauthorized access or theft. However, there is no such thing as absolute privacy. Malicious data breaches occur every day and expose personal information to unscrupulous individuals who use it for their own financial gain or sell it to others who will equally abuse it.
Personal information isn’t all that difficult to obtain. Did you know that 87% of the U.S. population can be uniquely identified using only gender, date of birth and ZIP code? There are many ways to obtain personal information and many people are all too willing to provide it through email, phone conversations, or in their social media profiles.
Once a cyber-criminal obtains enough personal information about you, they can easily use it to submit a fraudulent tax return.
How to reduce your risk
Regardless of how your personal information is exposed, you can avoid becoming a victim of identity theft tax refund fraud. The IRS provides several tips to keep important information private.
Keep your Computer Secure
• Use strong passwords and keep them safe.
• Use updated security software like firewall and anti-virus.
• Keep personal information private and out of sight.
• Back up your files.
• Use only reputable companies you’ve investigated.
Avoid Phishing and Malware
• Don’t assume ads or emails are from reputable companies.
• Be wary of emails claiming to be from known companies or agencies.
• Don’t click on links, type them down or simply visit the official website.
• Don’t download attachments from unknown senders.
• Use a pop-up blocker.
• Don’t post personal info on social media sites.
Protect personal information
• Every time you are asked for your personal information think about whether you can really trust the request.
• Give personal information over encrypted websites only. Look for “https” at the beginning of the web address (the “s” is for secure).
• Shred any document that contains vital information (credit card number, address, SS, etc.)
• Review your bank accounts, credit card statements and Social Security Administration documents often.
Being a victim of Tax fraud can be overwhelming. However, the government offers many ways of getting help. Learn what to do if you become a victim of identity theft tax refund fraud.
To protect yourself, be prepared. Sort out your accounts, take preventive cyber security measures and file your taxes early. Not only will it prevent tax identity theft but it will give you peace of mind.
*Note: The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.
Have you ever, or do you know of anyone who has fallen victim to any of these scams? What other types of scams do you know of? Share your tips and tricks.