The tax-refund fraudster is a resourceful person and it could be your next-door neighbor.
“You have an outstanding tax refund. Despite previous attempts we haven’t received your claim yet. Visit (URL link) to claim your tax refund online” (a typical fraud message).
Tax refund frauds have increased in scale and number in the past few years. The fact that the data online is much easier to obtain, and that the profit to make is rather high adds up to the scalability of this digital crime. The IRS has announced that these types of frauds have already cost the US authorities and civilians billions of dollars.
Who are the Targets?
The preferred choice of criminals is an online form users of any kind. It gives much more possibilities of requiring specific information and go undetected. These digital crimes involve a person who stole and assumed one’s identity without permission or consent. The fraudsters are skilled in gaining personal identifiable and financial information of any taxpayers or tax professional. The victims are not completely random, and are targeted for two reasons:
- Tax Professional, that owns login credentials and has access to numerous tax payers’ identities and financial information.
- Tax Payers, who never applied for tax refund are more valuable
Most individuals targeted are elderly people, families with low income, students, and people who never used the government benefits available to them.
How does the Tax Refund Scam Work?
In the cases of tax payers and tax professionals less than often criminals use brute force and more often they use typical email scams. There were several serious cases of organized tax frauds. The most recent being an employee at USPS and his ally who recruited him to participate in the conspiracy of identity theft tax fraud. USPS employee was able to obtain multiple identities and use them in submitting the tax refund. The allies have collected $2.5 million, at the time of conviction.
The fraudsters are using this data in vast amount of ways. Most of them are abusing the opportunity to submit fake insurance claim, submit the tax refund, all in the name of the victim whose identity was stolen.
Recent cases also report abuse of IRS logo and credibility. Scammers have assumed the companies identity and sent emails posing as the employees of the IRS. The malicious act addressed certain problem or threatening tax payers under criminal accountability and material penalty to abide by their requests. Usually it was obtaining personal information or clicking links or attachments that will infect computers. Malware involved in the scams are ransomware and remote-control type viruses. The last one allows the criminal to remotely access and control the victim’s computer. Any information he finds on the device including financial information, credit cards, bank accounts, personal identifiable information is his to take.
The tax professionals are much tempting target than the tax payers, since their data base stores large amount of personal information of their clients. The sole purpose of these attacks is to attain the information that has as a result financial gain. Through tax refund they attain identity of the tax payer and pose as him to collect financial compensation. Digital filing for the tax refund is easier than one thinks. The tax returns are usually filed early in the tax season. A person who files for the refund electronically needs name, SSN and date of birth. These information’s can be discovered in multiple ways:
-Through social media profile,
-Phishing with email message that will install remote access malware,
-Hacking into personal or organizations computer searching for files with personal data,
Security and Protection
Obtaining any personal information or just one small piece is enough for the criminals to pose as someone else. Identity theft has risen in numbers over the past years. It has become a most common type of crime all over the world. Despite the severe penalties of 30 years in prison, identity thieves do not show any inclination of stopping. The FBI has recently expressed the concern that in the upcoming years, they expect this crime to evolve and expand even further. The Federal bureau of investigations has created a list of ways to prevent having your identity stolen:
– Even if you never filed for tax refund, do it early in the season to prevent the criminals abusing what is rightfully yours.
– Read online mail messages wisely, avoid clicking on email attachments and links.
– Reduce using your SSN, and store it in a safe place.
– Use complex passwords,
– Use security and identity protection software
– Update software regularly
– Use firewall settings
-Check your credit score annually
Identity theft has its many forms and the tax refund fraud is just one of them. Tax professionals can protect and prevent identity theft of their clients only by protecting themselves. The rise of online number of crimes just shows there is no sign of it going away any time soon. Cybercriminals will use the skills and the tools in any way possible to obtain the required information that will provide them with financial gain.