Technology definitely makes our business and personal lives easier and more convenient. With computers and smart phones — along with e-mail, texting and the Internet — we have everything we need at our fingertips. Unfortunately, all of this wonderful and useful technology also creates new opportunities for thieves.
Many industries are affected by these opportunistic thieves. An Internal Revenue Service employee recently was arrested and charged with multiple counts of wire fraud, mail fraud, subscribing to false federal tax returns, aiding and assisting in the preparation of false federal tax returns, aggravated identity theft and perjury. Among other types of scams, this thief was using the names and Social Security numbers of various people on tax returns as dependents without their authorization. These types of thieves file false returns early in the filing season using electronic filing. When real taxpayers try to file, their returns are rejected because the Social Security numbers have already been used.
Not only does this type of fraud give thieves money to which they’re not entitled, it creates a filing nightmare for taxpayers whose identity has been stolen. The IRS employee mentioned above was also preparing fraudulent tax returns for other taxpayers. He was charging them for his services and in some cases taking part of their fraudulent refunds for himself.
What can the ordinary person do to protect themselves from this type of fraud? From the tax preparation side, beware of tax preparers who don’t list themselves as paid preparers on the tax return. The IRS says most identity theft occurs from non-tax sources, so try to safeguard your Social Security number as much as possible. The truth of the matter, though, is there’s very little we can do to protect ourselves from unethical people who have access to this information. If you find yourself the victim of this type of fraud, a reputable tax preparer can help you report the crime to the IRS and get your tax return filed.
Another particularly scary scam I recently heard about that could easily deceive any of us is a wire transfer scam. It doesn’t involve income taxes or the accounting industry, but I feel it’s really important to get this information to as many people as possible to try to help prevent anyone from being a victim of this scam. This scam could work for any type of sales agreement, but has been affecting the real estate industry for a couple of years.
This is how the scam works. A hacker breaks into a real estate agent’s e-mail account and scans the account for current sales transactions. The hacker then intercepts e-mails between buyers and sellers. The hacker changes the e-mail address of the sender by one letter or digit and sends the e-mail on to the recipient. The recipient doesn’t notice the email address is slightly changed (would you?) and replies to the e-mail. The hacker receives this e-mail and repeats the same process to the original sender. The two parties exchange e-mail through this third-party crook.
In this story, the brokers were also communicating by text and voice, asking and confirming the receipt of documents via e-mail. Eventually, the two parties struck a deal. Wire transfer instructions were sent from the title company to the buyer. The buyer wired the money according to the instructions received. The money went right into the hackers’ account, never to be seen again.
The hacker in this case was following the deal and either forged wire transfer documents completely or intercepted the title company’s e-mail, changed the account and routing information and sent it on to the buyer.
What can we do to prevent ourselves from being a victim of this type of scam? Having secure file transfer isn’t enough with a clever hacker. In this type of scam, confirming the details of the wire transfer in a voice conversation would have made the parties aware the wire transfer instructions were false.
Technology can be useful, and many of us don’t believe we could get along without it. We should try to make sure, though, that we couple technology with due diligence to protect ourselves. If we stay informed, protect personal information and exercise caution when using modern conveniences, we might be able to avoid being victimized by one of these scams.