Have you ever received an email from a “friend” urging you to send them money since they are traveling in a faraway country and they are now stranded? Their story recounts how they’ve been robbed and how they desperately need your help –and of course, that “help” is in the form of a wire transfer, right away.
Chances are, you’ve received this frantic message from a friend and have considered sending the money. But, then your better judgement kicks in and you realize it’s probably a scam — an effort to gather your personal information in order to steal your identity. Unfortunately, some people don’t realize this until it’s too late.
Be on the alert. A phone call (or email) from someone impersonating an IRS employee is becoming more commonplace. These calls usually involve threats of arrest and financial penalties, followed by a request for payment to avoid charges. For the record, the IRS never contacts taxpayers on the telephone or by email, only via regular mail with a letter. If you are the target of one of these calls, you should report the incident to the Treasury Inspector General for Tax Administration or call the TIGTA hotline at 1 (800) 366-4484.
Identity Theft and Credit Card Fraud
These steps can make it more difficult for thieves to steal your information:
1) Place a freeze on your credit. Each of the four consumer credit bureaus (Equifax, Experian, TransUnion and Innovis) allows you to place a freeze on your credit. This means that if someone attempts to open a line of credit, bank account or any account that requires your Social Security number, they are blocked. This actually also includes you, which some might consider a blessing as you’re standing in Banana Republic, trying to decide whether or not to open that new credit card. In the event that you do need to open a new account, you must contact the credit agencies and unfreeze your credit for a specified amount of time. Each agency charges a fee to freeze and unfreeze your credit (typically $10 each time). However, peace of mind and protection from fraud are well worth any inconvenience or associated fee.
2) Request a copy of your credit report. Annually, you are entitled to a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian and TransUnion). The website to obtain this free copy is www.annualcreditreport.com. You may also request a copy by phone at (877) 322-8228.
3) Guard your SSN. Do not give out your Social Security number unless absolutely required and do not carry your Social Security Card in your wallet.
4) Sign up for credit monitoring & identity restoration. LifeLock and similar services help detect identity-related incidents, alert their members to suspicious activity and address fraud-related issues on behalf of victims. They will also help you restore your identity should it ever be compromised.
5) Use a token for online financial passwords. Financial institutions sometimes offer a token (a small device that creates a unique six digit number each login) that serves as an additional password every time you log in to view your account.
6) Request a tax return PIN. While none of the above steps will prevent thieves from filing a tax return fraudulently in your name, these actions may reduce its likelihood. To prevent a fraudulent tax return, you would need to contact the IRS and request a tax return PIN. The IRS does not approve all PIN requests, particularly if you have not previously experienced fraudulent activity. You should consult with your CPA or tax preparer for more details on requesting a PIN from the IRS.
One Final Recommendation
While on vacation, either here or abroad, do not log in to any public computers or use unsecured wireless hotspots. Scammers are just waiting for you to go online and show them your personal information.
Kaleb Paddock is an Associate Advisor at Stanford Investment Group. Kaleb specializes in helping young families make smart financial decisions, typically involving questions about their equity compensation. He and his wife enjoy jogging along Stevens Creek Trail with their one year old son and serving others in their local church.