6 Tax-Time Concerns for Payments Companies
Published April 8, 2016 8:31 AM
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Updated October 20, 2016 10:28 AM
1 Min Read
Joanna C. Pecha
A taxpayer's annual refund is a big prize that fraudsters are eager to steal. Many new risks are being introduced by new technology, but there are cross-industry efforts to combat these new schemes and make sure each refund gets to the proper household.
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Problems with Prepaid
Many of the major tax refund scams the IRS catches involve prepaid cards. In one recent example, a crime ring responsible for $10 million in fraudulent refund claims directed much of that sum onto prepaid cards .
PIN Pilfering
The IRS mails a six-digit PIN to victims of tax fraud, and this extra factor of authentication is meant to prevent fraudsters from targeting the same taxpayers two years in a row. But the PIN can also be obtained through the IRS website after answering four basic security questions. Fraudsters are already using the website to obtain victims' PINs, according to security expert Brian Krebs .
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Prized Paperwork
W-2 forms are a goldmine of personal info, and many tax fraudsters want to get their hands on these documents. Weight Watchers was recently tricked into exposing the forms of 434 current and former employees as the result of a phishing scam, according to The Wall Street Journal.
The Need for Speed
The underbanked want to get their refunds fast. This adds risk , but it also keeps tax preparers on their toes. "Each tax year, tax preparers learn about the new ways that fraudsters try to steal data, and they get a little more sophisticated at verifying customers and identifying fraud," said analyst Ben Jackson.
State by State
State governments are participating in a plan to create common names for ACH files used to disburse tax funds. This initiative is designed to help prepaid card issuers filter for tax refund deposits to better spot fraudulent refunds loaded to their cards.
Security Summit
Through a cross-industry effort , the IRS is urging tax-preparation firms to collect up to 20 new data elements and ensure prepaid card issuers monitor accounts for unusual activity and contact the taxpayer for verification.
