Tax scams are on the rise and criminals use this time of year to take advantage of vulnerable people. The IRS is urging taxpayers to be on the lookout for potential fraud and is warning people to be cautious when giving out personal information. One of the most recent incidents happened right here in Michigan.
We've all heard the horror stories of people losing money in a scam, yet we think it could never happen to us. When a fraudster claims to be from a reliable source, like the IRS, it's sometimes hard to distinguish fiction from reality. In March 2015, the Livingston Daily reported that a Howell woman fell victim to an IRS tax scam* and lost a significant amount of money. She received a phone call from a person who knew her name and address.
Using social engineering techniques, the caller claimed that the woman owed $4,200 in back taxes and demanded immediate payment in the form of a prepaid debit card. Later, she got another call asking for an additional $10,000 to correct a tax error and was told she would be arrested if she did not make the payment. Thankfully, police received notification of the incident before the women sent more money. An investigation is ongoing.
People across the country have become victims of IRS tax scams and several consumer alerts* have been issued. To keep your money safe, be on the lookout for these tactics that tax scammers use:
If you get an email from the IRS asking you to update your information online, this might be a phishing scam. Criminals want you to click on the links in the email and enter in your username and password. They'll capture this information and use it to access your accounts online. If you click the links, they may infect your computer with a virus as well.
The IRS will not contact you through email. If you get an email from the IRS that you suspect is fake, report it to email@example.com and delete the email. Check out our tips on how to spot a fraudulent email if you think you are being spammed.
Bogus Telephone Call
For this scheme, a criminal pretends to be an IRS agent and informs you that you owe back taxes. They'll demand immediate payment and ask you to send the payment in the form of a prepaid debit card or wire transfer. If you don't cooperate, the criminal may threaten to have you arrested.
The IRS never calls and demands immediate payment. If you do owe money, they'll contact you by mail first and will not ask for payment by prepaid debit card or wire transfer.
The Surprise Refund
If something sounds too good to be true, then it probably is. Criminals sometimes call or email saying that you have a refund coming your way. They'll tell you that they are sending a check and ask you for personal information. It's dangerous to give out your information over the phone because you have no way of verifying who you are talking to.
In the hands of a criminal, your information could be compromised or it could lead to identity theft. If you think you are the victim of identity theft, take these steps immediately to reduce damage to your credit and finances.
Criminals are masters of manipulation. They play to your emotions to make you feel frightened or confused. Scammers know that when you're emotional you're likely to overlook reason, and that's why they're often successful in getting money or information out of you. Stay alert when being asked for any personal information and always trust your gut. Stopping fraud starts with you.
*Third party website. Lake Trust Credit Union is not responsible for the content, availability, security or compliance of any linked third party websites. In addition, the site's privacy policies may differ from those of Lake Trust.