Craig Jablonski VP, Operations
Tax season is peak time for scams. In fact, the Better Business Bureau (BBB) reported that taxpayers lost $5.7 billion in 2022 to tax scams and fraud.
The enormous amounts of valuable personal and financial information shared online and in the mail during tax season create a wealth of opportunities for scammers.
So, how can you protect your information and your funds? Here are some tips from the BBB and common scams to look out for.
Filing Best Practices to Deter Tax Scams
First, file your taxes as early as possible – before scammers have the chance to steal your personal information and file a fraudulent return.
Thieves may pose as a third-party service, offering to create your online account at IRS.gov, but instead use your information to file a fake return and take the refund for themselves. They can also use that information to get a loan or open a new line of credit.
If you plan to file your own taxes, make sure you double-check that you are on the official IRS website. Keep in mind, the IRS will never ask for credit card information over the phone. Additionally, they will never threaten you or demand immediate payment. Scammers use fear tactics to pressure victims into handing over their funds before they have a chance to carefully evaluate the situation or consult with someone else.
When using a tax preparer, do your research. Ask them what they do to protect your data and check for reviews online using the BBB website.
If at any point you receive notice about an alleged “duplicate tax return” or additional funds owed, contact the IRS directly. Don’t click any suspicious links – instead, go to the official IRS website and use the contact information listed there.
Scams to Look Out for this Year
While fraud is more prevalent around tax time, scams can happen any time of year.
One of the best ways to protect yourself is to be familiar with current scam tactics, especially as technology continues to evolve. According to the FINRA Investor Education Foundation, when someone is aware of a specific scam, they are 80% less likely to fall victim to it.
Grandparent Scams
Using personal relationships to prey on people’s emotions is a key component of many successful scams. However, the grandparent scam can be especially damaging. Fraudsters are able to capture a recording and use advanced technology to create an imitation of that person’s voice. They may call and impersonate a loved one, pretending they are in trouble and need money fast.
To help protect vulnerable family members, or falling victim yourself, choose a “password” to share with loved ones and say that word when an emergency arises so they can confirm it is really you. If you get a call or text from a number you don’t recognize claiming to be someone you know, call their usual number to double-check they are who they say they are. And, always confirm any financial requests with other family members. Don’t fall for the scammers’ threats when they tell you to keep their call a secret. To avoid allowing your voice to be recorded for the purpose of scamming others, don’t answer any emails or calls from someone you don’t know. Fraudsters need a less-than-10-second recording to recreate your voice using artificial intelligence.
Romance Scams
Romance scams are a fairly common fraud tactic using fake relationships to steal money. They usually begin with messages on social media or dating apps, as thieves use the information provided on victims’ profiles to gain their trust.
After a connection is established, these con artists may say a loved one is sick or claim they need help with a very important delivery. Then, they’ll ask for money.
However, scammers will usually ask for funds in a format that is harder to trace or refund, like gift cards or, more recently, in cryptocurrency.
To avoid falling victim to a romance scam, make sure to talk to friends and family about your new relationship and pay attention if they become concerned. Don’t share any personal information like your usernames, passwords, or codes that they can use to access your accounts. And, if someone you’ve just met starts asking you to send them money because they’re in trouble, it is likely a scam.
Cryptocurrency Scams
Scammers like to use cryptocurrencies for two reasons: payments generally can’t be reversed, and cryptocurrencies don’t have the same protections as credit or debit cards.
Sometimes, scammers will claim to be a love interest who desperately needs funds, but they can also start as someone pretending to be with an “investment manager.” These fraudsters may call you, claiming they have an inside tip or that they can multiply your investment by double, triple, or more.
Protect yourself by never mixing online relationships and investments. If you meet someone on a dating site and they want you to send them crypto or want to show you how to invest, know that it is likely a scam attempt. And remember, a legitimate business or government agency will never demand you make payments via cryptocurrency.
Employment Scams
Some fraudsters entice their victims through fake interviews with a company that appears to be legitimate. However, this fake business will send the applicant a fake email to collect personal information, or say they are using a third-party to conduct a bogus background check. Once they have your information, it’s easy for them to hack into your bank account.
Also keep an eye out for job postings that advertise easy income if you buy their program or require that you receive or send money to another account.
When job hunting, make sure you look up the name of the company and include the terms “scam” or “complaint” to see if anyone has run into trouble with that business or has been scammed by the person hiring you. If someone asks you to buy cryptocurrency or pay some kind of fee up front to get the job, that’s an indicator that it’s an employment scam.
What to do if You Fall Victim to Tax Scams
If you believe you have been the target of a scam, report it to the FTC. Your information can be used to build up cases against fraudsters, educate the public, identify trends, and more. Just go to ReportFraud.ftc.gov and click “Report Now.”
Protecting yourself from scams involves layering up on your security. Take advantage of early tax filing, familiarize yourself with common fraudulent schemes, and learn what to do if you do fall victim – all of which will help you ward of potential threats.
But, what do you do if you’ve already paid a scammer or given them personal information, like your social security number? While your money may already be gone, it’s always worth trying to recover some of your lost funds. Check out this resource from the FTC detailing who to call based on what action was taken.
As your relationship banking partner, Waterford is happy to provide tools and tips to help mitigate the risk fraud. If you have questions or need assistance with a possible scam, please do not hesitate to contact us.
About the Author
Craig Jablonski is a seasoned Banker, who has spent the last 40 years in the financial industry. At Waterford, he serves as the Vice President, Director of Operations, where he and his team oversee the many products that fall under the Operations umbrella such as Wires, Card Services, Positive Pay, Proofs, and beyond. He also helps to establish standards for operational related policies and procedures.
If you’d like to learn more about fraud protection or any of our banking services, please contact us here.
