Fraudsters seem to get more creative in their attempts to trick you into giving up your personal information so they can wreak havoc on your financial life. Money Girl reviews the primary ways criminals try to dupe you and how to stay safe.
My QDT editor, Karen Hertzberg, was recently the target of an identity theft scam. Fortunately, she didn’t take the bait. Karen suggested that I write about current tax and Social Security scams so you don’t fall prey to one, either.
Every year, fraudsters seem to get more creative in their attempts to trick you into giving up your personal information. Once thieves have it, they can wreak havoc on your financial life. They can commit many different types of fraud, including:
- applying for credit in your name
- using your health insurance
- intercepting your tax refund
- opening utility accounts in your name
- hijacking your government benefits
Types of Tax and Social Security Scams
Here are three illicit techniques that criminals use to dupe you and how to protect your finances.
1. Calling you to impersonate the government
Criminals impersonate government agencies because they know it can intimidate or entice you into giving up personal information or money. A recent scam occurs when you get a robocall saying your Social Security number (SSN) is inactive due to suspicious activity or connection with a crime.
The robot tells you that you must call a specific number to verify the last four digits of your SSN or you’ll get arrested. Or it directs you to press a keypad number to speak with a support representative to reactivate your SSN. They may trick you by asking for your SSN to verify your identity or to supposedly reactivate your number.
Or a thief might call you bearing good news. Who doesn't like hearing that they're entitled to a big tax refund? Then they ask for your bank account number to deposit the money.
Thieves might say that you qualify for an increase in your disability or retirement benefits. But to get it, they claim you need to verify your identity by giving your name, address, SSN, and birthdate. If you provide those personal details, the criminal has data that makes it easy to steal from you.
The Internal Revenue Service (IRS) or the Social Security Administration (SSA) will never call you unless you’re actively working with them on some issue. Nor do they suspend, revoke, or block Social Security number or seize your money.
Other criminals may call saying they’re from the IRS and that you owe taxes. They’ll threaten you with arrest unless you make immediate payment and ask for your credit card number or a bank wire transfer. Victims have even been convinced to put funds on prepaid debit cards or to pay criminals using bitcoin.
In another crazy scheme, thieves say that your bank account will be seized due to some illicit activity. But the scammers try to convince you that they can protect your money if you transfer it to gift cards and give them the codes. Can you say, “buh-bye money?”
All these ploys are complete baloney. The Internal Revenue Service (IRS) or the Social Security Administration (SSA) will never call you unless you’re actively working with them on some issue. Nor do they suspend, revoke, or block Social Security number or seize your money.
No government agency would threaten to arrest you, send police to your home, revoke your driver’s license, or do anything as retaliation for not calling them back or taking some immediate action.
But scammers are practiced at convincing you. They do it for a living and double down on techniques that work. In some cases, they may have information about you, such as your name and address, and they'll use it to build rapport. They usually use fake but official-sounding titles or identifying information to get you to trust them.
Don’t be swayed by anything a phone scammer says or even by what appears on your phone’s caller ID. Scammers can spoof caller ID, so it looks like the SSA or the IRS is calling.
How to stay safe
If you receive a phone call from a robot or person claiming to be from a government agency, hang up the phone without giving them any information. Relevant correspondence from the SSA or IRS would come in writing via snail mail. You never have to verify part or all of your Social Security number to any person, company, or government agency that makes an unsolicited call to you.
Any out-of-the-blue call from the so-called government is a scammer, every single time.
Any out-of-the-blue call from the so-called government is a scammer, every single time. And if you’re not sure, hang up and call the SSA’s main number at 1-800-772-1213 or the IRS at 1-800-829-1040 to verify the situation.
2. Sending unsolicited emails to steal your personal information
The second primary way that criminals attempt to steal your personal information is by email, which is known as phishing. The communication appears to be from a legitimate company or government agency.
Phishing may lure you into clicking a link in the email. The link leads you to a fake website that asks for personal data such as your SSN or banking information. Email links and attachments can also download malware that makes it easy for a criminal to access your computer remotely.
How to stay safe
Remember that government agencies don’t send email unless you’re already in communication with them about an ongoing issue. They would never ask for your personal information or include suspicious email links or attachments.
Always keep your computer updated with the latest security software that includes firewall and anti-virus protections. Make a rule that you’ll never click on email links from unknown senders and quickly delete any emails that seem suspicious.
3. Stealing your identity to file taxes
Every year around tax time, there’s an increase in identity theft by criminals who file bogus tax returns using stolen Social Security numbers. They hope that you’re due a big fat tax refund that they can intercept.
There are even criminals who set up shop as tax preparers just to get your personal information. Be wary of anyone who promises inflated tax refunds, asks you to sign a blank tax return form, or charges a fee based on a percentage of the refund you receive.
How to stay safe
If you receive a letter from the IRS about a suspicious tax return, respond to the notice by calling a legitimate 800 number. Also, complete IRS Form 14039, Identity Theft Affidavit (PDF) and attach it to your tax return and pay any taxes owed.
Make sure your tax records are secure and that you only use a certified accountant for tax help.
How to Protect Your Social Security Number from Scams
The bottom line is that no government agency or legitimate company will ever ask for your personal information out of the blue. They would never tell you to send cash, wire money, or buy gift cards via the phone or email. When someone contacts you asking for sensitive information, always err on the side of caution and keep it to yourself.
No government agency or legitimate company will ever ask for your personal information out of the blue. They would never tell you to send cash, wire money, or buy gift cards via the phone or email.
Even when a real organization, such as a school, doctor, or charity asks for your SSN, they may not truly need it. Resist giving out your number unless it’s actually required and you’re sure they have a right to have it. The fewer people and places who have access to your SSN the better. When in doubt, ask if you can provide an alternate form of ID, such as a bill that proves your current address or a student ID.
Some examples of organizations that need your SSN because they report information about you to the IRS include:
- Investing firms
If you haven’t already taken your Social Security card (or a copy of it) out of your wallet, do it today. Keep it in a safe place, such as a locked filing cabinet or a bank safe deposit box.
Carrying an SSN card with you is dangerous because it could easily be lost or stolen and fall into the wrong hands. You only need the original to verify your identity when you begin working for a new employer.
If you haven’t already taken your Social Security card (or a copy of it) out of your wallet, do it today.
If you receive any paper mail that includes your SSN or other confidential information, be sure to shred it before tossing it. Identity thieves are known to dumpster dive for sensitive documents. Also, elect to review paperless bills and e-statements whenever possible. Stealing paper mail is another common way that criminals can hurt you.
For some types of fraud, it’s difficult to know if you’ve become a victim. However, if a thief opens a credit account in your name, such as a credit card or loan, it will appear on your credit reports with the major credit bureaus (Experian, Equifax, and TransUnion). So, take advantage of free credit reports and keep close tabs on them to watch for anything you don’t recognize.
Also, monitor your credit card and bank account for unauthorized activity. That’s a surefire way to know if a criminal has compromised your finances or identity.
Consider enrolling in an identity protection service, such as LifeLock or Identity Guard, that monitors a variety of information including financial accounts, SSN activity on the dark web, and changes to your credit reports. They also provide insurance to reinstate your identity and pay legal fees if you do become a victim.
If you’ve been a fraud target or victim, you can file a complaint with the Federal Trade Commission (FTC) at identitytheft.gov.
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