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Thursday August 25, 2016

Washington News

Washington Hotline

Tax Fraudsters Use iTunes Cards

John Breyault, Vice President of the National Consumer League, reports a sharp increase in tax fraud using iTunes cards. Tax fraudsters typically use fear and intimidation to obtain the iTunes payments.

Psychologists understand the use of fear and anger. Your emotions may actually cause you to ignore rational warnings by your brain that could protect you. Tax fraudsters are experts in manipulating your emotions to restrict your natural reasoning process.

Frank Abagnale is a consultant who studies fraud. He was at one time engaged in fraud and check forging. His early life story led to the movie "Catch Me If You Can."

Abagnale has taught seniors at AARP meetings how to protect themselves. He counsels that the IRS will not initiate a tax collection effort with a phone call and will not demand payment with a specific card. However, the sophisticated scams now being perpetrated have caused even "very smart people" to become victims.

The Treasury Inspector General for Tax Administration and The Federal Trade Commission explain how the latest scammers operate.

1. Calls – The calls are usually placed from overseas. While they use voice over IP (VOIP) technology, the Internet calls are made to appear to come from the Washington, D.C. 202 area code. Scammers also now may use robocalling computers and can place thousands of calls each day.

2. Tracking – Abagnale indicates that the scammers are now keeping a database of phone numbers. They have started to track the likelihood that a person will answer, the time they remain on the phone and their probable level of vulnerability.

3. Information – A scammer may start by listing your name, date of birth, address and Social Security number. Many victims have fallen prey to the scam because they think this information must only come from the IRS. However, your information is likely to be available on the internet. A scammer also will frequently provide a fake badge number to show his or her claimed authenticity.

4. Threats – A common threat is a claim that police are on the way to arrest you. If you do not immediately make payment, you will lose your driver's license and your bank account will be seized. The scammer often requires the victim to stay on the phone. He claims you will be arrested if you hang up.

5. Payment – The scammer will ask you to stay on the line and drive to a nearby store to buy iTunes cards. You often are told not to discuss the reason for purchase of the card with anyone in the store. It may be necessary to buy several iTunes cards to fulfill the desired amount. After purchasing the card, the scammer will direct you to give him the number on the card and he will immediately transfer the funds to an iTunes account. The Federal Trade Commission estimates that 70% - 90% of this fraud now involves the use of iTunes cards.

6. Sale of iTunes Account – The scammer will sell the iTunes account at a discount to a third party. Scammers generally do not want to hold the funds in their own accounts.

7. Protection – TIGTA and FTC offer several types of advice. First, do not answer the phone. If you do answer, immediately hang up. The scammer will usually not call again. The phone scams may be reported on www.irs.gov or to the Federal Trade Commission.

Published August 19, 2016
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