Tax Refund Fraud: A Growing Trend

With the April 15 deadline right around the corner, now is as good a time as ever to make sure you’re protecting yourself against a growing trend: tax refund fraud. How do fraudsters steal returns from millions of Americans every year, and what steps can you take to avoid becoming a victim? PYMNTS.com spoke with Max Anhoury, VP of global sales at iovation, to learn more.

Tax Refund Fraud: A Growing Trend

Is your tax refund safe?

You might not think twice about filing for your return, but tax refund fraud – or the act of falsifying a tax report and stealing someone’s refund – is on the rise. In fact, an internal IRS study placed potential exposure to this crime at around $21 billion over the next five years.

How do criminals manage to falsify these reports, and what can average consumers do to protect themselves? PYMNTS.com spoke with Max Anhoury, VP of global sales at iovation, to find out.

According to Anhoury, iovation is a company that’s familiar with tax refund fraud because of their work in the device reputation space.

“What we basically do is focus on stopping online criminals from committing their crimes by actually focusing on the devices that they use to commit those crimes,” Anhoury explained. “If you think about devices in our context, we think of mobile phones, laptops, PCs, tablets: any device that can really browse the Internet that we can create a global unique deice ID for. That’s how we track these risks.”

So how do criminals trick the IRS into giving them someone else’s refund? According to Anhoury, the key lies within online prepaid cards and tax refund services, which allow criminals to easily receive tax refunds once someone’s identity is stolen. It doesn’t matter how a criminal gets access to your information – be it through phishing, a data breach or any other method – all that matters is that he or she gains access to your credentials.

“They take credentials and they’ll apply for a prepaid card, be approved for an account, and once that account is activated they will take the credentials and go online through one of the online tax preparation forms – like an HR Block or Intuit – and file an online return with the stolen credentials,” Anhoury explained. “And they do that very early in tax cycles because they want to preempt the good American citizen form getting their tax refund in first.”

Once the IRS fulfills its obligation and places cash back onto the prepaid card, criminals can use that money to shop at stores, withdraw the funds from ATMs or monetize it in a variety of ways. The citizen who should’ve received those funds is then out of luck, as the IRS has already distributed their refund.

“Frankly, I’d be surprised if our listeners haven’t been exposed to this personally or know someone who this has happened to,” Anhoury said. “It’s a relatively easy fraud to perpetrate.”

To hear more Anhoury on tax refund fraud and how to protect yourself, listen to the full podcast below.

   

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Max Anhoury

Vice President of Global Sales, iovation

Max Anhoury oversees iovation’s global sales team as Vice President of Global Sales, and works to bring new clients to iovation through partnerships and direct sales. Anhoury is also involved in product marketing and intelligence, ensuring that the right products are offered today and in the future based on his daily interactions with clients and prospects across many verticals and geographies. A serial entrepreneur, prior to his current position, Anhoury has been the president of five different companies in various industries including aviation and entertainment.