Obamacare Navigators, SIRF fraud, cyber squatters, and gift-card-gotchas head up this year’s list of holiday scams.
So why discuss scammers at Christmas time? Two good reasons:
Reason #1: The swindlers don’t take time off. They work overtime during the holiday Season in search of big payola at your expense. You must be wary. Keeping Seasonal scammers out of your billfold, and off of your permanent credit report, requires an extra level of caution during the holidays.
Reason #2: Take it from me. Financial scams ruin way more New Years than you might think. As one of the area’s busiest bankruptcy attorneys, people share with me intimate histories of personal financial loss, and destructive scams. I see firsthand the catastrophic damage, and I don’t want it to happen to you.
If you would like my best advice in a nutshell? Be very cautious with your personal financial information this holiday season to avoid the pain and embarrassment of getting burned.
The looming sign-up deadlines for President Obama’s Affordable Care Act (ACA) have been a boon for identity thieves taking advantage of this historical turn of events. While identity theft phishing for private financial information is nothing new, the ACA offers scammers a chance to add a fresh twist to an old game.
Q: How does the scam work?
A: By offering assistance. Helpful fraudulent phishers now contact you as “ACA navigators”, offering to “help” you understand how the ACA might benefit you, your family, or loved ones.
The illicit phisher offers to educate, and prepare you for the “coming change in your health insurance”. Eventually the phisher will ask for personal information such as social security numbers, employer information, address, income figures, and occupation to conduct a (phony) comparison of your current health insurance to the ACA option.
Q: How does the scam spread to harm my loved ones?
A: Once you are “sold” on the change to the false ACA insurance option, the phisher collects even more personal financial data about you, your spouse, and children to “sign up your entire family for the better ACA health insurance option”. The real objective is not to help you at all – but rather to steal the identity of every household member. The bogus phisher then uses this accurate financial information to open up bogus lines of credit, falsely claim welfare benefits, or perhaps to steal Federal, or state income tax refunds through a practice called SIRF fraud.
Stolen Identity Refund Fraud, or SIRF fraud
The practice of SIRF fraud is now rampant at both the state and federal income tax levels. You should use your spare time during the holidays to prepare your 2013 tax return for quick filing in 2014.
Q: What is SIRF fraud?
A: Using stolen personal details, and made-up withholding forms, a SIRF fraudster applies online for dozens of tax refunds per day under your identity, and the identities of others, to be sent to addresses of his choosing. When the real taxpayer later tries to file a return, the IRS, or state income tax authority rejects the true taxpayer’s later honest tax return refund request, and the mess can take months to sort out.
Q: How big is SIRF fraud?
A: SIRF fraud is big criminal business. Georgia found that 160,000 out of 4 million state income tax returns were suspicious, and may have been prepared by SIRF fraudsters. This is 4%, or almost 1 in 20 of Georgia state income tax returns filed. Foreign and domestic criminal gangs are adding SIRF fraud to their agenda. One Armenian (former Soviet bloc area) gang filed 2,000 false returns claiming $7 million in false returns.
The “poster girl” of SIRF fraud is Tampa, Florida’s 27 year old Rashia Wilson, who suggestively (and unwisely) posed with fistfuls of cash on her personal Facebook page. The bundles of cash she clutched in her “selfie” Facebook photo represented only a small fraction of the estimated $11 – $20 million she and her gang netted in bogus refunds.
Ms. Wilson used some of her illicit millions to purchase a $90,000 Audi, and a custom gemstone encrusted necklace spelling out her name in diamonds. She also spent $30,000 on a birthday party.
The IRS has nearly 3,000 employees devoted to identity fraud issues like SIRF fraud, but the IRS admits it can’t keep up with this explosive new scam.
Q: How was Ms. Wilson caught?
A: The IRS did not catch Ms. Wilson, and her gang. She was caught by local police. Tampa police Major Ken Morman told ABC News last year that a decline in local drug dealing suggested that criminals had found a more lucrative business. Neighborhood Tampa detectives started to ask around. They eventually discovered Ms. Wilson and her gang of 13 co-conspirators, who at the time were also expanding their enterprise into stolen identity credit card fraud. The unrepentant Ms. Wilson received a 21 year prison sentence.
Q: How easy is SIRF fraud?
A: The SIRF fraud craze has spread like wildfire because it is so easy. For example, some 170,000 completely bogus Federal tax refund requests were filed by prison inmates alone between January and September 2012.
Q: How do I best defend against SIRF fraud?
A: There are two easy ways to beat SIRF fraud:
- First, file your 2013 tax return(s) ASAP after January 1, 2014 so a SIRF fraudster doesn’t have time to beat you to the punch. The IRS will always accept, and recognize the first-to-arrive tax return.
- Second, do not give out personal information to phishers like the phony “Affordable Care Act navigators” discussed above.
Crooks steal, or slightly alter the website address of a well-known company, and launch a bogus site that may be a nearly identical copy of the real thing. While these sites may have malware, they primarily function to collect your credit card information for the purchase of inferior counterfeit goods, assuming you actually receive them.
Q: How can I avoid the lure of cybersquatting copycat and counterfeit websites?
A: As the kids say, let’s “get real”. Do you really think a genuine $500 Louis Vuitton hand bag is on sale at a site with a bogus looking URL like “www.Lew.E.Viewton.net” for $75.00? Very unlikely. At best, you will get a phony bag. At worst, your credit card information will be circulated all over the Ukraine, and you may never even see even a phony bag.
Gift Card Scams
After taking gift cards from display racks, thieves peel and copy, or use a portable scanner, to get the code underneath the scratch-off strip. Then they put the cards back on the rack, and wait for the cards to be bought and activated. By dialing the card’s toll-free number, the thieves can find out exactly how much value is on the card. The way is clear now for them to make online purchases, or generate cloned copies for in-store use, leaving those who you intended to receive your gift cards with worthless cards.
Another angle on the gift card scam has an crooked store cashier pocketing the cash that you paid for the gift card without actually activating the card at the cashier’s check stand.
Q: How can I avoid the gift card scam?
A: Your best bet: Purchase gift cards from a store’s customer service counter, or website, rather than from untended display racks. If you do buy from a display rack, make sure the cashier scans and activates the card in your presence. You don’t want the cashier just pocketing the money, and make sure you get a receipt to give to the gift recipient in case there’s a problem.
Why discuss a gloomy topic like financial scammers during the holidays?
We care about you, that’s why. I sometimes see the effects of financial fraud that are so devastating that the scam was the “tipping point” of cascade of debt default. All too often, the fraud capped the person’s struggle to stay current on bills, and rent, mortgage, and car loan payments fell delinquent. Perhaps this event, through no fault of your own other than your innocent trust, may lead you to financial catastrophe.
These fraudsters look to financially victimize everyone they can, resulting in a disproportionate impact on elderly people and struggling households. If anything, the scammers find even bigger opportunities for fraud every holiday season.
Join us in fighting back. Keep the holiday scammers at bay, and enjoy the holidays with your loved ones by passing on this newsletter to those you know. If they like this type of info, they can subscribe to the newsletter by entering their email address in the subscription form on any interior page on this web site like this one.
Think Of Us, and Get a Jump On 2014
If a friend or relative confides in you that he or she has been with their finances, we may be able to help. If your friend or relative calls us at 253-383-1001, we will treat them in the same courteous, calm, no blame/no shame fashion that we treat all of our clients, whether they decide to move forward with a bankruptcy filing or not. If your friend or relative feels more comfortable with you at their side during their free 30 minute consultation with me, you are most welcome to accompany them to their appointment.
Right now would be a great time to get the jump on a late 2013, or early 2014 bankruptcy filing. Delay does nothing except prolong the worry and stress of financial problems over the holidays. Don’t wait, contact us now for a free 30 minute consultation.
My Special Request To You On Behalf Of Those Less Fortunate
If you should find that you and your family have some spare resources as 2013 draws to a close, please consider sharing some of your blessings with others. A cash, or nonperishable food donation to your local food bank, will not only help someone in need, it will also start your 2014 with a warm feeling of what the holiday season means, and a great opportunity to teach those younger members of your family a valuable lesson about the gifts that givers receive by helping others in need.
We hope that the links that we’ve provided below will help you identify a community food bank that is near to you:
- Pierce County: www.fishfoodbanks.org, or www.efoodnet.org.
- King County www.foodpantries.org/ci/wa-seattle.
- Kitsap County www.kcfbc.com.
- Thurston County www.walkthurston.info/food.
- Lewis County www.foodpantries.org/li/lewis-county-food-bank-coalition, or360-330-1519.
- Locate other food banks nationally, and locally: www.feedingamerica.org.
Looking for a wonderful feel-good charity that provides gifts and food to needy families with children? Please consider my personal favorite: www.forgottenchildrensfund.org.
Blessings to you, and all those close to you this holiday Season,
James, Ray, Lisa, Mary, and Tina
The Law Offices of James H. MaGee
Washington Bankruptcy Attorney