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Tax Refund Fraud

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Reduce Your Chances of Tax Refund Fraud

by Tyler Berg, Mill City CU Compliance Specialist

Tax season is upon us, and many of us are anxiously awaiting our tax documents to file our taxes. Many of us look forward to a refund every year to help get caught up on bills, make large dollar purchases, go on vacation, maybe even go to the casino and put it all on red or black. Unfortunately, criminals are just as excited as you come tax time every year because that means they get to use stolen identity information to file fraudulent tax returns to make off with some easy money. Whether you owe, come out even, or are entitled to a refund, all of us are at risk to become victims of tax refund fraud.

Tax refund fraud had been increasing for years up until 2016 when a public-private partnership between the IRS and hundreds of banking partners were able to identify and return enough suspected fraudulent returns that there was almost a 50% drop from 2015. If you’re curious about the numbers, there were 512,278 identity theft affidavits sent to the IRS in 2015 compared to 237,750 in 2016. In 2015, there were about 1.2 million confirmed identity theft tax refund returns that were stopped by the IRS compared to 787,000 in 2016. Lastly, in 2015 financial institutions stopped and returned 243,361 suspicious refunds back to the IRS compared to 108,539 in 2016.

Though the IRS and financial institutions, including Mill City Credit Union, are working very hard to identify and stop this kind of fraud, it is still a very real possibility with all the major data breaches. Even if you haven’t been affected yet, once your information is out, criminals can and often do sit on that information for as long as they want before they try to use your information to file fraudulent tax returns or open new accounts and loans in your name.

With so much of your information potentially out there, what can you do to reduce the chances of being a victim?

  1. The most impactful thing you can do is to safeguard your social security number. As convenient as it may be to carry around your social security card in your purse or wallet, that is a huge no-no. Wallets and purses get stolen and misplaced every day all around the world. Not only do you compromise your social security number that way, but what is another thing that most people carry around in their purse or wallet? You probably guessed it. Your government identification containing your full name, date of birth, and address. In one unfortunate incident, you could lose everything a fraudster needs to steal your identity. Though it may not be convenient or easy, you should make it a point to memorize your social security number and store the card someplace safe like a safe or fireproof box at home.

As convenient as it may be to carry around your social security card in your purse or wallet, that is a huge no-no.

  1. Another thing you should never do is give out your entire social security number or personal information over the phone to unsolicited callers. Places where you are current a customer may ask for pieces of it, but no place should ever ask for the whole thing. If that happens, consider asking them to offer you another piece of information that only you would know that they would have on file. Verification at Mill City may involve verifying members by asking for a code word, mother’s maiden name, or month and year you became a member to name just a few options. Remember, if you receive a call from someone claiming to be from the IRS or law enforcement, they will never threaten you with arrest or deportation for refusing to provide those pieces of information.
  1. Thirdly, ignore and delete e-mails inquiring about your personal information even if they claim to be from the IRS, law enforcement, or credit card companies. Don’t open up the emails. If your email service lets you preview the message, don’t click on any links or open any attachments. Some criminals try to gain access to your information through your email by attaching malware such as Trojans and viruses to the email.
  1. Lastly, check your credit report on a regular basis to monitor for unusual activity or new accounts that are opened that you may not have opened. There is one website where you can get your credit report from all three bureaus for free once per year. Visit AnnualCreditReport.com to check your report. One strategy that many people like to use is to pull from a different bureau every four months to be able to check in on your report more often since you get one free pull from each bureau per year.

You can also sign up for a credit monitoring service such as FraudScout which provides proactive, fraud and credit monitoring, resolution, and document replacement assistance services for a cost which can vary based on which level of protection you elect. If you would like to know more about how much FraudScout may cost and what benefits you receive with each level of protection, check it out on our FraudScout web page. As an added tool, Mill City members can also use SavvyMoney to get a TransUnion-based credit report and credit score free of charge! SavvyMoney is found in both Virtual Branch and the Mobile Money app.

Mill City Credit Union also provides LifeStages, free of charge, for members with checking accounts and to members of their household. LifeStages is another identity management service that helps to protect your information and provide education about fraud prevention and trending threats.

If you believe you are a victim of tax refund fraud, follow the steps below to start the process of re-securing your identity:

  • File a police report with local law enforcement
  • Contact the IRS Identity Protection Specialized Unit at 800-908-4490
  • Fill out IRS Form 14039, Identity Theft Affidavit
  • Report the identity theft to the Federal Trade Commission at www.consumer.ftc.gov or call the FTC Identity Theft hotline at 877-438-4338 or TTY 866-653-4261
  • Contact the fraud departments of the three major bureaus:
    • Equifax – www.equifax.com, 800-525-6285
    • Experian – www.experian.com, 888-397-3742
    • TransUnion – www.transunion.com, 800-680-7289
  • Close out any accounts that have been tampered with or opened fraudulently

For more information, the IRS website has additional protection tips and a more in-depth explanation of what it is they are doing to help fight tax refund fraud.

If you have additional questions or concerns about tax refund fraud or are interested in finding out more about LifeStages or FraudScout, you’ll find full details on our web pages or please feel free to reach out to our Member Connections team at:

  • 800-284-6328
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