6 Ways Fraud Occurs and How to Fight It

Financial scams and tax fraud keep showing up year after year, and while the fraudsters keep getting smarter, there are steps you can take to become a much tougher target. But how exactly do you manage that?

Awareness is the name of the game, whether you’re staying up to date on the biggest new scams or using awesome security and control features like Entegra Bank’s CardValet service.

Each year, the IRS publishes a list of the twelve most popular tax scams, called the “Dirty Dozen”. Let’s look at six of the Dirty Dozen and see what a service like CardValet can do to help keep your hard-earned money out of the fraudsters’ pockets.

Online Phishing

Phishing can be done from either fake emails or bogus websites, but the tactic is the same: If they can trick you into revealing any sort of personal information, they’ve struck gold.

It can be tricky to tell whether an email or website is legitimate, but one tip you can remember is that the IRS never contacts taxpayers by email. If you get an email claiming to be from the IRS, you can ignore it and move on with your day.

Phone Scams

Oh boy, this is a scary one. There’s nothing like answering the phone and getting berated by some stranger claiming to be the IRS and giving you a 10-second head start before the SWAT team arrives.

Just like phishing, though, receiving a call from the IRS is a red flag. The IRS never makes their first contact with a taxpayer over the phone—they send an official correspondence through the mail.

If you know that the IRS doesn’t make first contact by phone call, that really takes the air out of the screamer on the other end of the phone. If you ever think the call might be legit, hang up and call the IRS at (800) 829-1040. If there really is an issue, the IRS employees will be able to help.

Identity Theft

You may think that identity theft is most rampant during tax season, but the months between April and January are just as dangerous. Identity fraud is a year-round tactic, and you can never be too careful about protecting your family’s personally identifiable information (PII) such as Social Security numbers, tax ID numbers, your date and place of birth, and key tax information like employer information and prior-year adjusted gross income (AGI).

Unfortunately, identity theft isn’t as simple to defend against as phishing and phone call scams, so investing in identity protection software is a good call.

Tax Preparer Fraud

Here’s one you might not have expected, but you definitely need on your radar. There are folks out there who pose as tax preparers solely to get your information—which really stinks for the honest guys that make up the vast majority.

Wherever you file your taxes, whether online or with a tax preparer, you should do your research before filing to make sure you’re giving your personal information to a credible, responsible party.

Fake Charities

Now, this one really hits me where it hurts. Who is heartless enough to pose as a well-meaning charity just to steal your money and info? Well, they’re out there, apparently.

You can always double-check a charity by going to the IRS’s list of 501(c)(3) qualified charities and looking for the organization in question.

Inflated Refund Scam

Make way for one of the most intricate schemes out there. First, the fraudster gets your information, but here’s the odd part: They actually file your tax return for you.

Why?

Well, they add false credits and deductions, which inflates your tax refund. The IRS receives your return, writes a check for the inflated refund, and sends it to you. Not so bad—until the fraud poses as the IRS, telling you that you received too much refund money, and demands the excess back.

You comply, and they make off with the excess, but then the real IRS notices a problem and demands the excess, too. Now you have to pay twice the stolen amount!

There’s really not much you can do here, but this highlights why it’s important to keep tabs on your bank account and be aware of any unexpected or unexplainable amounts that are credited to or debited from your account. As soon as you notice something unusual, contact your bank to start an investigation.

What can you do to prevent these scams?

This is all a little scary, but there are steps you can take to lock down your personal information. Make sure any sites you use PII on have security features like two-step verification and an encryption and privacy certification.

You can even take it a step further with spending limits and transaction controls on your debit card if you use fraud protection like Entegra Bank’s CardValet service. Even if someone gets your debit card information, with CardValet you have control, alerts, and even geographic controls that let you limit where in the world usage is allowed. Check out Entegra Bank’s website for more information!

Bottom line, fraudsters are after your hard-earned money. If you protect that with good controls and awareness, then you’re doing everything you can do to stay safe from fraud.

P.S. For a handy summary of these scams and tips to avoid them, check out our infographic!