Online Tax Scams to Guard Against

Most people may hate the tax filing season but scam artists are licking their lips in anticipation of this time of year.

Scammers are out in force as the tax filing deadline approaches. Here are some of the most common scams to be on the lookout for:

Filing false tax returns

The Internal Revenue Service's online filing system is convenient for taxpayers – and for scammers, too. Once a bandit clips your Social Security number, they can file a bogus return and divert the refund to their debit card or post office box. That leaves you having to explain to the IRS why you shouldn’t be arrested for tax fraud.

Promising refunds

Because the tax code is so complex and changes from year to year, scam artists can make plausible pitches that promise to deliver money to you from the federal treasury for a credit you never heard of. For example, one swindle involves the American Opportunity Tax Credit. The credit is designed to help families pay for current college expenses. Scam artists are telling unwary targets that the credit applies to college expenses incurred at any time in their lives or even for taxes paid on groceries.

IRS correspondence

For many Americans, tangling with the IRS has all the allure of major dental surgery. If the IRS sends an e-mail asking for information that can be used to empty a person’s bank accounts or steal their identity, most people will turn it over and sigh with relief that that's all the IRS wants from them. Phishers are aware of those attitudes, which is why they craft e-mails pretending to be from the IRS soliciting that kind of information. Sometimes, they include attachments with those mails, too, which can plant nasty software on a recipient's computer, or links that can accomplish the same thing.

Here are some tips to help you avoid becoming a victim of tax fraudsters:

• Ignore all e-mail from the IRS. The agency doesn't contact taxpayers through e-mail about tax refunds or tax payments. Neither does it request banking and Social Security information via e-mail. On the other hand, scammers do. Suspicious e-mail can be forwarded to the IRS at phishing@irs.gov.
• Send all unsolicited offers for tax services to the trash bin, and whatever you do, never click on attachments in blind solicitations.
• Keep your security software up to date. A good Internet security suite can provide you with a second layer of defense should your first layer -- common sense and skepticism -- be penetrated.
• Choose your tax preparer carefully. Remember that someone who prepares your taxes has all the information they need to steal your identity, too.

Finance sector a magnet for online frauds

THE financial sector continues to be a magnet for frauds and cyber crime is becoming a major threat as increased internet usage gives rise to scams and data theft, a global survey has found.

Information technology experts say online banking creates fertile ground for frauds who use scams such as phishing to steal clients’ money after obtaining their account details.

Professional services company PricewaterhouseCoopers (PwC) says in its latest global survey on crime: "Most individuals and organisations rely upon the internet and connected technologies, opening themselves up to the risk of attack from global criminals from anywhere in the world."

PwC partner Louis Strydom said up to 40% of respondents in SA had not received cyber crime training or awareness communications of any kind during the past 12 months.

About 46% saw cyber crime as an external threat, he said, warning that companies should recognise the potential internal risk of the crime and prepare themselves accordingly.

"We are experiencing comparable levels of cyber crime to our international counterparts. South African banks are at the forefront of technology and combating cyber crime, but continued vigilance is required," Mr Strydom said yesterday.

Criminals were posing as cellphone company representatives and tricking customers into switching off their phones while they tried to gain access to their bank accounts, the South African Banking Risk Information Centre warned recently.

"Our survey showed that cyber crime has been rising rapidly over the last two years. We also found that South African companies still have some way to go with regard to readiness," Mr Strydom said.

PwC said globally, embezzlement — particularly by senior executives such as directors and other employees in key positions — was another growing problem, as was external fraud.

Globally, 45% of organisations in the financial sector had suffered fraud in the past 12 months, compared with 30% in other sectors, while cyber crime was the second most commonly reported type of economic crime.

Source: http://www.businessday.co.za/articles/Content.aspx?id=169376

How Credit Card Companies Detect Fraud

As many as 10 million cardholders could get phone calls from their issuers notifying them of suspicious activity posted to their accounts.

Most customers will be happy not to have to pay for stuff they didn’t buy.

But few of them will know exactly what was involved in averting a potential disaster.

Here's what happens:

Credit card companies detect fraud by flagging several different kinds of transactions. Among them are large purchases made just after small ones, online purchases and purchases that don’t fit a cardholder’s profile.

They have incentive to do this: Credit card companies "lose approximately seven cents per every hundred dollars of transactions due to fraud,” said Andrew Schrage, co-owner of the Money Crashers Personal Financewebsite. “For 2010, this translated into roughly $8.6 billion.”

If the credit card company "notices a relatively small purchase — for example, gas, followed by a large one say, for a flat-screen TV — this is likely to tip them off,” he said. “This is standard behavior for a criminal with a stolen card. They make one small purchase to see if the card is still active, and then make a major purchase.”

The anonymity of the Internet makes it an ideal venue for credit card thieves, he added.

“A large number of online purchases in a short period of time is also likely to get a credit card account flagged,” he said. Multiple purchases in rapid succession will also set off the credit card companies’ alarm bells, whether they’re made online or at a store.

Credit card companies also monitor cardholder transaction habits to establish individual customer profiles. These help issuers determine which purchases are standard operating procedure for the cardholder, and which ones deserve closer scrutiny.

According to Steve Weisman, author of “The Truth About Avoiding Scams,” issuers become suspicious whenever a transaction occurs that falls outside of the parameters of a customer’s profile. So if a cardholder usually only uses a credit card buys groceries and pay the dry cleaning bill but suddenly incurs a charge for five Louis Vuitton handbags, it’s almost certainly  a red flag.

Similarly, people who do most of their spending in the U.S. should notify card issuers before traveling overseas, as any charges they incur in a foreign country could be flagged.

The ex post facto nature of credit-card fraud detection may not offer much comfort to uneasy cardholders. However, they should be aware issuers spare no effort to crack down on these crimes, and not just because it’s good for their customers.

So the next time the credit card company calls to let you know they’ve detected suspicious activity on your account, remember they have as much of a vested interest in stopping it as you do.

Source: http://www.cnbc.com/id/46907307

Sweepstakes Scam: South Florida Senior Robbed Of $9,500

If someone calls to say you've a won sweepstakes that you never registered for, don't fall for it.

An elderly woman in South Florida lost $9,500 to scammers who told her on the phone that she needed to pay $20,000 in taxes in order to claim a sweepstakes prize totaling more than $1 million, the South Florida Sun-Sentinel reports. The 70-year-old woman sent two personal checks to an address that the caller had said was for the IRS.

The scam was uncovered by an annuity holder, who became suspicious and contacted the police after the elderly woman tried to cash out an annuity, according to the Sun-Sentinel. The woman lives alone on just $1,500 per month.

Jeff Atwater, Florida's chief financial officer, said in a statement that he is proud that the police prevented the victim from "giving away her life savings to these scam artists."

Real lotteries do not ask for money upfront, and it should be a "red flag" if you are told that you've won a lottery that you never registered for, Atwater's press release noted.

Also, don't trust strangers. Anyone that you don't know who is offering you free money probably is lying to you. Don't send money to anyone you don't know.

The elderly woman in South Florida is not the only person who has fallen for a sweepstakes scam. A woman in Plymouth, Massachusetts, recently sent nearly $500 in Walmart gift cards to scammers who had convinced her she had won a sweepstakes, according to Wicked Local.

Some scammers do their work in person. A scammer told a victim at a Goodwill store in Riverside, California, earlier this month that she had a winning lottery ticket, according to ABC 7 News. She offered to share part of the jackpot if the victim gave some cash upfront. The victim said yes.

Similar scams are also common by mail. A man in Cedar Grove, New Jersey, recently received a letter in the mail telling him he had won $450,000, according to Patch. It included a fraudulent check to help pay for a $4,100 processing fee. He did not fall for the scam and instead told the police.

A woman in St. Cloud, Minnesota, recently received a letter saying she had won $2.1 million, but that she needed to pay a $34.99 processing fee, according to AM 1240 WJON.

Source: http://www.huffingtonpost.com/2012/03/28/sweepstakes-scam-elderly-lottery_n_1385758.html

Schemes & Rip Offs: Online G.E.D. Scam

The folks who run the G.E.D. tests for students who didn't graduate from high school have a strong warning about on-line scams, targeting the hundreds of thousands of people.

Denise Richardson was one of the victims.  She knew that going back to high school or taking the GED would take more time than she had.  So she went on-line and found what looked like the perfect solution.

For a few hundred dollars, she could take what she thought was the G.E.D. test on-line, and if she passed, get her diploma.

"It was like a perfect opportunity and so that's where they got me," Richardson said.

After $500 and a 5-hour test, she got her diploma.  But when she then tried to enroll in a local technical college, they were suspicious.  Turns out, the test and diploma were fake.

The real GED testing service says thousands of people have also reported getting taken the same way.

"If you're not coming in person to one of our official testing centers, it's not the real GED test," said GED Testing Service president and CEO Randy Trask.  "And it's not likely to be recognized by employers or colleges."

The GED testing service has filed a lawsuit against what it calls a network of 13 web sites, that allegedly used the company's trademark to offer fake tests and diplomas.

The defendant named in the lawsuit is reportedly in Pakistan now.

Meanwhile, the website and the 800 number associated with this case have been redirected to another diploma website that doesn't claim to have any U.S. accreditation.

Experts say the lesson we can all take away is to always go to the real G.E.D. testing website for information about how to take the real G.E.D. in your state.


Source: http://www.valleynewslive.com/story/17286337/schemes-rip-offs-online-ged-scam

Tax Refund Scam Costing IRS Billions Of Dollars

It's tax season and you know what that means: Time for scams.

The government is cracking down on a scheme that they say has already likely bilked the IRS of billions of dollars, theWall Street Journal reports. The perpetrators of the scam, which has been going on for at least five years, take the social security numbers of Puerto Ricans -- who don’t have to pay federal income taxes -- and use them to file fake tax returns.

Prosecutors have been able to secure multiple convictions of people involved in the scheme, but have yet to nab any of the top organizers, the WSJ reports. 

The Puerto Rican scam is just one of many ways that fraudsters are stealing billions from the IRS and taxpayers. The number of tax refund scams has increased 700 percent over the past three years both because of the prevalence of online filing tools and because the IRS doesn’t cross-check returns against payroll records in an effort to get refunds out quickly. Overall, more than two million fraudulent tax returns were filed last year, costing the government $2 billion, according to CBS.

As of March 9 of this year, the IRS had stopped 215,000 questionable returns, with $1.15 billion worth of refunds, according to Forbes. The most common forms of fraud? Identity theft and "phishing," or trying to get sensitive account information through electronic communication.

A tax refund scam rocked one small Georgia town this year, as more than 67 residents in a town of 5,000 got ripped off, the Atlanta Journal-Constitution reports. Fraudsters posing as legitimate tax prep companies tricked some residents of Elberton, Georgia into letting them file their tax returns then tricked the IRS into sending them most of the refund instead of the victims.

And in North Carolina, the attorney general's office says that as many as 15 taxpayers found that their identities were stolen when they tried to file their returns, according to a local NBC affiliate.


Source: http://www.huffingtonpost.com/2012/03/30/tax-refund-scam-irs_n_1391490.html

GED scam offers tests online

You can't take a GED test online — yet.

At least, not legitimately.

The Region 9 Education Service Center announced Friday that if earning a GED is on your to-do list for the spring, you can start the process by attending three orientation days at its service center, Tuesday through Thursday.

If the orientation days are completed successfully, students move into free GED preparation in daytime classes at the Galaxy Center or Wayland Baptist or in evening classes at Region 9 — beginning the training as early as April 3.

Their announcement comes on the heels of a national report that fraudulent online testing services are offering fake credentials to students who pay a fee to pursue their GED and to test online.

The GED Testing Service filed a lawsuit against a network of 13 websites, alleging they used the GED trademark to set up convenient websites for earning a GED that offered fake tests and diplomas.

"If you're not coming in person, it's not legitimate," said GED director Randy Trask in a report by MSNBC on the "Today Show."

Octaviano Garza, Region 9 adult education program coordinator in Wichita Falls, said he only recently learned about the GED scams and hadn't had anyone personally complain to him about them.

He said some legitimate companies — including colleges — are in the GED business for a profit. Region 9, however, offers a program that's federally- and state-funded through the Texas Education Agency.

"And it's free," Garza said.

Paid programs "take advantage of those folks that really are not aware of the fact that ... the state offers it at no cost to students," Garza said.

Various legitimate online sites may charge a fee to help students prepare and practice for the GED test, but the test itself cannot be taken online.

Even his program won't administer the test but only prepares them with the orientation and classes.

"We try to set them up to succeed when they take the test," Garza said. "When we send them to take it, we know they will pass. We do practice tests and assessments. Once they get to the score they need on the practice test, then they need to go take the test."

The Region 9 program is held accountable by the state and federal government and must show proof of moving students along a timeline of six accomplishments that lead up to completion of the GED.

Region 9's program starts with the three-day orientation that serves as a screening for a participant's commitment to the process. It's also a training opportunity to give them information about goal-setting, dealing with barriers, budgeting and planting the seed about the possibility of going further than just the GED in their education.

It primes them for success, Garza said. "We show them job pay ranges and different things they can do in different professions."

The Chamber of Commerce officials also visit the orientation and urge students to earn the National Career Readiness Certificate, which will give them an edge with employers. It certifies the student has mastered soft skills that enhance their performance in the workplace.

The three days of orientation can be taken in the daytime, from 9 a.m. to noon, or in the evening, from 6 to 9 p.m., and anyone interested in preparing for their General Education Development Test — the GED — must attend all three days in daytime or evening.

Once complete, students are folded into ongoing GED classes at a convenient place within the 12-county area by April 3.

Another spring orientation begins April 23, 24 and 25. The next orientation begins in July.

Such classes are more needed than ever before, Garza said.

Both nationally and locally, the drop-out rate is rising. Once, one in five students dropped out of school without earning their diploma; today, it's one in four.

"That's pretty bad," Garza said. The problem affects students in all subgroups, but mostly low economic and minority students, or those who come from homes where both parents work and emphasis is not given to academia, he said.

Source: http://www.timesrecordnews.com/news/2012/mar/24/ged-scam-offers-tests-online/