Tag Archives: identity theft protection

New Worry on ID Theft: Tax Fraud

Statistics on identity theft show that tax-related fraud causes billions of dollars of financial harm, but tax fraud assistance may or may not be included in identity theft protection products. For comprehensive coverage, an identity theft protection service must include tax fraud assistance.

What is tax fraud?

Instances of tax fraud could involve…

  • Phone scams where thieves pretend to be the IRS calling for money or information
  • Phishing scams where fraudsters send fake IRS emails or set up unsolicited websites to get money or information
  • Criminals using false information or a taxpayer’s stolen information to file fraudulent tax returns, thereby getting the victim’s refund
  • Dishonest tax preparers who defraud their clients with false deductions, inflated expenses or the like

How common is tax fraud?

Every tax season – and all the months in between – the U.S. Treasury Inspector General for Tax Administration (TIGTA) deals with dishonest tax-related schemes. The TIGTA has received well over 90,000 complaints about IRS phone scams and found that victims have lost approximately $5 million.

In 2013, the Federal Trade Commission (FTC) received 1,455,146 identity theft complaints – a third of which stemmed from tax-related fraud. In 2014, the FTC’s 1.5 million fraud-related complaints revealed that consumers have paid a total of $1.7 billion because of fraud, and a third of those complaints were also tax-related.

Fake tax returns cause problems, as well: $4 billion of tax refunds went to fraudsters after they sent in fake tax returns to the IRS.

How do identity theft protection plans address tax fraud?

Unfortunately, not many products provide services specifically geared toward preventing tax fraud. Common features, like credit monitoring, are less likely to catch these kinds of crimes because tax information is not connected to the main credit activity being monitored.

Another reason for lack of tax fraud assistance could be strict limitations on a third party’s ability to communicate with the IRS. The IRS requires that anyone communicating with it on a victim’s behalf must have IRS-approved credentials (e.g. enrolled agent, certified tax preparer or certified public accountant).

The upkeep of a tax fraud assistance division can get expensive, as well. A significant amount of time and money are needed for finding approved specialists, giving them the time to work through each case and maintaining the correct credentials. Some certifications involve continuing education, periodic renewal fees that can really add up and purchasing and maintaining a tax preparer bond in the thousands of dollars.

Despite limited capabilities to detect that a member is a victim of tax fraud or act on a victim’s behalf with the IRS, a specialist could still assist victims by guiding them on what to do next and giving them the necessary resources to carry out the steps themselves.

How can you avoid tax fraud?

First, whether it’s on your own or through an identity theft protection plan, tap into resources about how to avoid victimization. For example, learn how to pick a reliable tax preparer and how to handle tax documents with confidential information.

Second, make sure your protection plan includes Social Security number (SSN) monitoring because your SSN is a key piece of information that the IRS uses to confirm your tax return actually came from you. In some instances, if a taxpayer’s SSN is at risk, the IRS will issue a special PIN number that differentiates the taxpayer’s real tax return from the thief’s fake ones.

Third is tax fraud assistance, which provides access to professionals who will help victims report the crime and address the resulting issues. Victims of tax scams deal with the same burden of significant financial losses and rebuilding reputations that accompany any other kind of fraud. Support from people who are familiar with both the tax system and identity theft recovery will give victims direction and help them take action.

Taxes are already frustrating for many, so adding the problem of identity theft only aggravates the situation. The statistics prove that tax fraud is relevant and must be taken into account when building security against identity theft and fraudulent activity.

My Employee Is a Victim! Now What?

The difference between a victim of identity theft who does have coverage and a victim who doesn’t is monumental, and the costs (time, money, health) affect not only the victim but also his productivity in the workplace. It is vital that an employer understands the necessity of an identity theft protection plan, and which types of services and features should be included, so employees have access to the resources they need for timely and sufficient assistance.

How does identity theft affect the victim?

Identity theft affects more and more people every minute; in fact, every two seconds someone becomes a victim. The financial consequences of this growing threat can’t be ignored:

  • Over the last couple years, roughly $45 billion has been lost because of identity theft.
  • Fraud ends up costing companies three times as much as what was initially stolen.

Thieves not only steal people’s information and money but their time, as well. Close to a third of identity theft victims spend a month or more trying to resolve the issues, and a lengthy recovery process takes a toll on victims’ health:

What does identity theft have to do with productivity?

Identity theft can distract victims and affect their levels of productivity at work.

If identity theft causes such severe stress, and the recovery process takes months to complete, imagine how many workers are distracted or absent because they’re dealing with fraud, and imagine what that’s doing to their company’s bottom line.

How can identity theft protection products help?

Catching identity theft before it gets out of hand, and getting quality support, can help cut costs. Say a thief steals someone’s personal information and tries to reset her bank password. If the victim has a protection plan that includes high-risk transaction monitoring, that feature would catch the transaction as it is occurring and could prevent it from going through. If the victim doesn’t have that kind of alert system, she may not even find out about the issue until the thief has already drained the account.

There are different kinds of monitoring available, and each type covers a different group of data points. The most common are credit monitoring (for credit-related activity) and identity monitoring (for personal information). Other features could include watching high-risk transactions, assistance with tax fraud and medical identity theft cases and data sweeps.

Assistance during the recovery process can also lessen distress and distraction. If victims have access to a Certified Identity Theft Risk Management Specialist (or someone with comparable experience) who can give them an immediate action plan and actually take on some of the recovery tasks, victims can recover more quickly, which means decreased absenteeism and financial losses.

Over the past year, 70% of companies suffered from fraud. The threat is real, and the consequences are deep, but they can be subdued if employees have a coverage plan with support for victims and protection against future attacks.

The Cost of Fraud in the Workplace

Identity theft in the workplace and the expensive consequences are affecting more and more companies each year. One in three businesses were affected by data breaches last year, and the number of identity theft victims continues to grow. As the threat increases, it’s important to understand how identity theft happens, how it affects a company and its employees and what an employer can do to help.

How does identity theft happen?

Or better yet, how do thieves get information? Common ways include the following:

  • A dishonest employer/employee stealing information from coworkers (97% of cases, reported by companies that were fraud victims and uncovered the responsible party, were inside jobs.)
  • Hacking company databases or installing malware
  • Phishing – sending fake emails or setting up unsolicited websites/pop-up windows to get information from unsuspecting victims
  • Phone scams (40% of fraud complaints noted that the fraudsters contacted them via phone.)
  • Going through the mail or trash

There are plenty of ways that a thief uses newfound treasures. A few examples are…

  • Filing fraudulent tax returns to get the victims’ refunds
  • Bypassing security questions to access bank accounts, etc.
  • Getting healthcare through a victim’s insurance
  • Opening lines of credit, obtaining loans, leases, etc.
  • Selling the information to other thieves

How does identity theft affect the employee?

Employees who become victims of identity theft must deal with all kinds of consequences. They’ve lost their sense of safety and privacy and probably have significant financial losses. It all adds up to major stress and lots of work, which means employees are going to be heavily distracted at their jobs.

Identity theft also brings major financial setbacks. Millions of victims are suffering from the billions of dollars lost to identity theft over the last couple years, and it doesn’t help that one in four workers already deal with major financial distress on a daily basis, whether they’re a victim or not.

How does identity theft affect the employer?

Identity theft hits every kind of business, robbing companies of their private information, revealing their private information and decreasing their levels of productivity.

Fraud repercussions decrease employee productivity and eat away at company revenue. Unfortunately, every industry is vulnerable.

How can the employer help?

A good way for employers to keep their companies safe from the consequences of identity theft is to incorporate an identity theft prevention and recovery service into the employees’ benefits program. Features could include continual monitoring, assistance for addressing suspicious activity and resources that help with resolution.

Identity theft protection plans with 24/7 monitoring of credit activity and personal information will help reveal fraudulent activity before it causes significant damage. Likewise, a product that provides assistance and resources for the recovery process can help alleviate some of the stress that victimized employees feel, because they have professional guidance and support for tackling all of the necessary tasks.

All employers have a reason to consider what kind of protection and coverage is currently available for their employees. More and more companies are affected each year, and the health and financial costs should be enough to push employers toward getting a solution.

A Holistic Approach to ID Protection

The devastation resulting from identity theft correlates with the fact that it infiltrates every part of a victim’s life: robbing them of time, privacy and money; possibly requiring both legal and financial action; and affecting victims mentally, physically and emotionally. When someone becomes a victim, so many facets take the toll that victims need a holistic approach to ID protection – one that readily addresses all of those facets so victims can recover from their losses, regain their reputation and rest assured with protection against future attacks.

What does legal assistance have to do with a holistic approach to identity protection?

A victim’s need for legal assistance comes into play, for example, when debt collectors harass the victim about a fraudulent debt, a bank or creditor refuses to acknowledge an account as fraudulent, criminal activities surface because of a thief’s actions or criminal activities are attributed to a victim’s records or when the victim wants to take a fraudster to court. These kinds of legal issues can make the victim’s recovery quite challenging, which is why a well-rounded protection plan should include legal assistance. Legal assistance could be providing referrals for trustworthy attorneys who know how to handle identity theft cases, and who work within reasonable distance of the victim’s location.

How can an identity theft protection plan address financial issues?

Monitoring members’ information and catching thieves in the act will help limit the damage done, but, for people who do find themselves victim to identity theft, an important part of recovery is adjusting to a new financial situation.

Financial repercussions of identity theft may involve fraudsters draining the victim’s bank accounts or racking up debt in the victim’s name, and, on top of that, victims usually spend thousands of dollars trying to get the money back and clear their name with debt collectors. Those are major financial setbacks for any budget.

A holistic approach takes into account the need for financial counseling. Victims will need access to financial professionals, like Accredited Financial Counselors, who can assist them with getting back on track financially. Financial counselors could help them assess and work on things like…

  • Adjusting budget to any financial losses
  • Allocating money to restoration needs (e.g. money to pay an attorney)
  • Restoring bank accounts
  • Rebuilding credit

How can a protection plan mitigate health issues?

A holistic approach recognizes the health consequences of being a victim and provides assistance to mitigate the issues.

More than one-third (36%) of victims said the identity theft incident caused them moderate to severe emotional distress. Why? Dealing with the evidence of fraud requires research, phone calls, dispute letters and claim forms, police reports, money and a lot of time. The to-do list can get overwhelming pretty quickly.

If victims have a fraud resolution specialist at their side, they have access to professional guidance from someone they can trust to provide the correct materials and next steps for reestablishing safety and privacy.

Getting assistance can alleviate some of the stress involved because members know they’re not alone, and they’re getting confirmation about what to do next. Top-of-the-line assistance would also include specialists who can actually take on some of the tasks that a victim must complete for resolution.

Dealing with identity theft is difficult, which causes a ripple effect of stress infiltrating other areas of life. When victims must race against the clock to repair the damage, they’re worried about the financial losses and stressing over how they’re going to make sure the problem doesn’t happen again.

How is education involved in a holistic approach to identity theft protection?

A checklist of features should also include education, so members can make smarter decisions with the day-to-day activities that may affect their risk of becoming a victim. Resources could include tips, newsletters, articles and webinars with helpful information like…

  • Understanding what is on a credit report, what’s problematic and how to resolve each matter – whether it’s an error or theft-related
  • How to file and dispose of paperwork with sensitive information
  • Extra precautions to take and questions to ask when creating an account or applying for a new credit card
  • Recent data breaches and who’s at risk
  • What’s the latest and greatest security software for consumers

A holistic approach includes some sort of education because it helps people protect themselves against future identity theft attacks.

People need a plan that takes a holistic approach to identity theft protection, covering every part of prevention and restoration. They need a plan that addresses fraud in a timely matter to prevent heightened stress, with features like monitoring and alerts for any suspicious activity, quick assistance for anyone who becomes a victim, financial counseling and legal assistance.

Identity Theft Services Explained

As thieves discover more and more ways to steal personal information, it is critical that people use identity theft protection services that involve a wide security sweep of all personal identifiable information and high-risk activity. The marketplace for identity theft protection now includes all kinds of monitoring services and features. Make the best choice by understanding each feature available, how they differ from each other and their capacity for sustaining protection.

Credit Monitoring

Credit monitoring is the process of reviewing a consumer’s credit activity with the credit bureau. It monitors the activity and changes to a credit report, including inquiries made by a creditor to request a copy of a report. Monitoring provides an alert system for potential fraudulent activity or accounts being established. Credit monitoring provides an alert system to activity affecting your credit report and credit score. Monitoring enables you to stay on top of fraudulent activity so that you can address the inaccuracies immediately. It also reduces the financial impact that identity theft can cause, by reporting the fraud earlier and reducing potential out-of-pocket losses.

Identity Monitoring

Identity monitoring looks at more than just credit information; it encompasses all personal identifiable information: name, birth date, address, email, phone number, Social Security number, etc. This could include monitoring the Internet, national databases, credit files, public records and more. If thieves have your personal identifiable information, it’s the perfect cover for their crimes because everything will point to you, not them. Even kids can become victims of identity theft: Each year, more than 140,000 identity theft cases involve children.

Social Security Number Monitoring

It’s exactly how it sounds – protection for one of the most important pieces of information that a person has. This type involves monitoring hundreds of millions of records for unauthorized use of a Social Security number (SSN). 70% of people are worried about the safety of their SSN. Monitoring an SSN is particularly important for children because thieves have plenty of time to use the child’s information for their own gain before the child finds out by applying for an account or a line of credit and is denied because of the thieves’ damage.

Data Sweeps

Unlike previous monitoring services that focus on particular data or activities, data sweeps encompass a plethora of touch points and personal information. Data sweeps monitor the Internet for instances of criminals using stolen phone numbers, addresses, birth dates and more. How many data points are included and how often the data sweeps occur vary from plan to plan. Data sweeps cover the information that consumers are worried about, like mailing addresses (50%) and phone numbers (60%). It can also help a person feel more secure about online presence because data sweeps can lead to removing exposed personal information on the web.

Credit Card Monitoring

The lending institutions that issue credit and debit cards will usually monitor transactions and notify cardholders of suspicious activity. Credit card monitoring, as offered through an identity monitoring service, will monitor the Internet for fraudulent activity involving credit card and debit account numbers, PIN numbers and other personal information in Internet hacker chat rooms and the dark web. Credit card monitoring looks at activity outside of the credit report and outside of activity monitored by the cardholder’s bank or issuing institution. As a result, it can detect fraud that may or may not make it to a credit report or be captured by the bank.

Recovery Assistance

Most services will not only keep you informed but help you resolve any suspicious activity. Features could include assistance from a credentialed professional. Some assistance features may only provide victims with next steps or resources, while others may actually take on some of the activities a victim must complete to rebuild his or her reputation. 47% of victims who spent 6-plus months fixing the issue(s) felt severe emotional distress vs. the 4% of victims who felt that way after resolving issues within 24 hours. Victims can limit the health and financial costs of recovery by using a protection plan that includes assistance from professionals who know how to get quick results.

Lost Purse or Wallet Assistance

Whether you misplace your wallet or it actually gets stolen, most identity theft protection services will help you contact the correct institutions and minimize the damage if a thief tries to use your stolen information. Despite the growing threat of malware and hacking, physical theft is still a problem, and 43% of physical theft happens at work.

Service Guarantee

Most companies have a service agreement that provides some sort of refund for customers if there’s a defect in the company’s service. New technological advances are made every day for security and thievery, so you need to make sure that a company will help you if its protection services can’t keep up with thieves’ new tricks.

Some identity theft protection services go above and beyond with the layers of security and assistance they offer, in addition to the commonly included products listed above. Some of those extra special features are:

Additional Databases

While most services monitor your personal identifiable information online or on credit reports, not all of them will monitor databases like criminal records and sex offender registries. Some companies charge extra for monitoring these additional databases. Thieves don’t just use your personal information to empty your bank account. Thieves will steal reputable citizens’ identities and use them as aliases when committing crimes.

Medical Fraud Assistance

Monitoring for medical fraud involves protecting insurance records from criminal use and assisting victims when a thief tampers with a victim’s medical history or racks up medical debt. The crime rate for medical identity theft increases by 32% each year, and more than $12.3 billion in out-of-pocket expenses were spent in the past year because of medical identity theft.

Tax Fraud Assistance

Products include giving victims an action plan and providing forms and contact information for working with the IRS. Services that actually do recovery work for victims must have certified tax specialists who are approved for working with the IRS on behalf of the victims. In 2014, the FTC’s 1.5 million fraud-related complaints revealed that consumers have paid a total of $1.7 billion because of fraud, and a third of those complaints were tax-related. Tax fraud could include IRS phishing schemes, phone scams and stealing taxpayers’ information to file phony tax returns and get their refunds.

Family Coverage

Protection plans may allow members to add family members to their plan; however, adding family members often comes with additional charges. When family members share accounts (e.g. bank, music, email), passwords, etc., everyone feels the consequences if one of them becomes a victim.

Other

Other pieces of your personal information that may or may not be included in the common types of monitoring: loan/lease information, driver’s license, computer security, bank account information, passports, etc. Thieves’ use of hacking, malware and social media have skyrocketed over the past few years. As fraudsters improve their tactics, they gain access to more and more information.

Each type of monitoring covers important information that could lead to serious damage if taken into the hands of a fraudster, and no one type covers everything. Likewise, each feature has importance, but they’re most effective when working together because they create sustainable, comprehensive coverage.

People need to make sure that their identity theft protection plan includes all the necessary data points with multiple types of monitoring, assistance and recovery features, so their information stays secure.