Thursday, March 22, 2012

Electronic Tax Filing News Update: Cyber Criminals

Online Cyber Criminals are a very real enemy for online taxes

Taken from a previous article:

In the animal kingdom, the weak are preyed upon by the strong. Lions eat the gazelles and life goes on. Unfortunately this also applies to our own society. In our weakened economy, people are far less likely to find the owner of an envelope full of one hundred dollar bills if they found it on the ground. If the opportunity presents itself, not every human being will do the right thing.

Those people are also the reason we are plagued with scams and other forms of misrepresentation that cheat other people out of their hard-earned money and possessions. This also rings true for taxes, and the IRS has released a great deal of information to not only educate yourselves on what to watch out for, but to also alert their consumers of the growing trend of identity theft and other ways to unlawfully procure your assets.
Full article can be read here
Full list of the Dirty Dozen Tax Scams for 2012 can be read here

Cyber Criminals not only threaten online tax preparation, but bank information as well

Cyber Criminals:
Tax scams are only part of the problem. The real problem is the conductors of these scams, the "ring leaders" of cyber crime. These hackers and other less than reputable people have only begun to be discovered, and the full extent of how long they've been running these operations or how much they've taken will probably never be found out. The reason is because these criminals can easily get into sensitive records and have access to not only people who are alive, but even dead people are being harnessed for their social security numbers and bank information. Below are a few examples of cyber crime, and unfortunately this is only a small scratch on the surface compared to what is most certainly is an epidemic sweeping the internet.

"Criminals receive identifying information from a variety of sources, according to Miller’s testimony. He cited the case of an Alabama woman, sentenced to prison, who obtained information about student-loan borrowers from her former employer and then filed false tax returns. Some prisoners also file fake tax returns and claim refundable tax credits, Miller said.
“We see thefts from schools,” he said. “We see thefts from hospitals, doctor’s offices.”
Nelson has introduced legislation that would impose tougher penalties and make it harder to gain access to the Social Security numbers of people who have died.

Quoted from: "FBI warns of new banking scam"(article link)
"In a new warning, the Federal Bureau of Investigation warns account holders of a new spam email scheme that involves a type of malware called "Gameover." The scheme involves fake emails from the National Automated Clearing House Association, the Federal Reserve or the FDIC. These messages attempt to trick recipients into clicking on a link to resolve some type of issue with their accounts or a recent ACH transaction. Once you click on the link, Gameover takes over your computer, and thieves can steal usernames, passwords and your money.
The FBI also warns the thieves' hacking capabilities can navigate around common user authentication methods banks use to verify your identity, which is certainly a cause for concern. Those additional authentication steps -- often personal questions, birth dates or other pieces of private information -- are meant to provide some extra security padding. released two accounts of cyber crime, done not only on our streets but even in prison!
"North Miami Beach, Florida (CNN) -- Criminals across the country are raking in billions of dollars in tax refunds through a new and brazen form of fraud that takes advantage of the IRS's fast online returns, law enforcement officials say.
Using laptops and free Wi-Fi connections, criminals are stealing identities and using the names of legitimate taxpayers to file fraudulent online tax returns. They've raked in billions, buying luxury cars, expensive jewelry and plastic surgery, police said.
"It's like the federal government is putting crack cocaine in candy machines," said Detective Craig Catlin of the North Miami Beach, Florida, Police Department. "It's that easy."
First, thieves obtain Social Security numbers and other personal information from insiders at hospitals, doctor's offices, car dealerships or anywhere the information is stored. Then, they file an online tax return using the real taxpayer's name and a fictitious income. In most cases, the criminals buy a debit card so the IRS can issue the refund on that card, although some thieves have also gotten their returns on actual Treasury checks.
The thieves know that the IRS does not verify the employer W-2s sent with the return until after the refund is issued."

From "Inmates bilk Uncle Sam for millions"(full article in link) :
"While the IRS was not aware the scam was happening at the county jail it did know it had been running in prisons across the country for decades, Ellsworth said.
The IRS declined to explain why it took so long to act in this case but says it has learned to identify fraudulent refund requests made by prisoners.
"It is not an easy process, particularly considering the fact that some inmates are entitled to tax refunds and that the prisoner population is not static," the IRS said in a statement.
More than $14 million in fraudulent refunds were issued to prisoners in 2004, according to testimony before a House subcommittee five years ago. But the IRS blocked more than $53 million in false claims from prisoners that year.
As the investigation at the Monroe County continues, at least one inmate is still allegedly filing falsified tax returns, according to jail officials, even though he knows about the investigation. And the IRS has been cutting him checks. Jail officials, however, say they have intercepted the checks.
Ellsworth says that as a taxpayer he is angry that billions of dollars may have been stolen from the American people over the years.
"I'm not optimistic unless somebody at the very top says make this stop that these losses aren't going to continue," Ellsworth said."

It's not all bad! Law Enforcement Agencies are stepping up online security

InformationWeek Security's article: "When Hackers Want Much More Than Money"(article link) gave insight on what agencies are doing about it:
"Cybercriminals shouldn't breathe easy, however, since almost every type of law enforcement agency is adding cybercrime investigation capabilities. "Most law enforcement agencies are tooling up at an amazing rate," said Novak. "Most law enforcement agencies are finding that there's a cyber piece to almost every case now. For example, people who investigate homicides, traditionally they never spoke with the cyber folks. But now they find that a cellphone in their case must be analyzed, a laptop must be analyzed." 
Unfortunately as our technology increases and we grow more dependent on it, more criminals will be enticed to take advantage of our dependency. Security does help, but it seems the technology for hackers to get in is superior to our ability to keep them out, and that is growing more exponentially every year. Be as careful as you can, as your information is there for the taking on the largely lawless west we call the internet. When you're shopping online or checking your bank account, remember that you may be being watched by banditos waiting around the stagecoach. Be sure you only share your personal information on secure sites, and if something seems too good to be true, it probably is...
 List of Sources:

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