by Emily Hechler 
Scams are everywhere. Unfortunately, they often target people who are the most vulnerable. This can be during tax season, while looking for love online, or when trying to support your community and family. Scammers are getting harder to spot due to AI technology helping them plot their schemes. Often, scammers will take your money or personal information and then they’ll never be heard from again. The best way to defend yourself from scammers is to be aware of their tactics. By learning how these scams work and recognizing the warning signs, you can protect yourself and your loved ones from becoming the next victim.
Tax Fraud
During tax season, you aren’t the only one working hard to get the job done. Every year, thousands of people fall victim to tax scams designed to steal personal information, refunds, or both. The good news? A little awareness goes a long way in protecting yourself. Here’s what you need to know to stay safe from tax filing scams.
How Do Tax Filing Scams Work?
In a typical tax scam, a criminal poses as a legitimate tax preparer. Once you hire them, they collect your personal information and use it to file a tax return in your name. However, they change the refund destination by altering your bank account details or mailing address, then pocket your refund.
In other cases, scammers might claim that you owe taxes and demand immediate payment, often in cash, then never actually file your return. This not only costs you money but can also lead to penalties for missing the tax filing deadline.
Common Tax-Related Scams
Tax scams aren’t limited to fake preparers. Other times, they’ll scam you in another way that still messes up your tax situation. Here are some examples:
- Credit & Refund Fraud: Some dishonest preparers promise big tax credits you don’t qualify for and charge you high fees to prepare the taxes for you too. Ultimately, you’ll still be held accountable to the IRS for your tax filing errors.
- Unclaimed Refund Scams: Scammers will post as the IRS to inform you that you have a tax refund waiting. They’ll ask for your personal information to “verify” your return. In reality, they take your information to steal funds from your account.
- W-2 Fraud: You might be encouraged to alter income or withholding information to receive a bigger refund. This can lead to trouble with the IRS later on for not reporting your information correctly.
These are just a few common examples of tax fraud. For another list of scams, visit the IRS website.
How to Protect Yourself from Tax Scams
When choosing a tax preparer, take time to verify their credibility. Here’s how:
- Be wary of ads with big promises. If someone guarantees a large refund before knowing your financial situation, it’s likely a scam.
- Check credentials. Always ask for their Preparer Tax Identification Number (PTIN). This number is required by the IRS for anyone who charges fees to prepare taxes. If they won’t provide it, that likely means they don’t have one. Walk away.
- Verify through the IRS directory. Use the IRS Directory of Tax Return Preparers to confirm your preparer’s qualifications. It’s also a great tool to use to search for a legitimate tax preparer.
Warning Signs of a Bad Preparer
Even after hiring someone, you should stay alert. Here are a few red flags that can note a lack of credibility:
- They ask you to sign a blank return. This likely means that they will likely pose as you by using your signature on other documents.
- They refuse to sign the return themselves. This is a red flag since they’re either not taking responsibility for the return or because the form isn’t valid without their signature.
- They inflate deductions or credits to increase your refund. Tax fraud is a serious crime. Even as the victim in this situation, you’ll be held responsible for the information on your return.
If you see any of these warning signs, stop working with them immediately and find a new preparer. As a credit union member, you may be eligible for exclusive discounts at TurboTax and H&R Block. These tools can empower you to file your taxes by yourself or with accredited professional help.
What to Do If You’ve Been Scammed
If you suspect that you’re a victim of a tax scam, there are four major steps to take. Remember, tax scams are serious and the longer you wait to report them, the more trouble you can be in with the IRS.
- Report it immediately to the Federal Trade Commission (FTC) and the IRS.
- Warn others. Let your family and friends know about the scam so they don’t become a victim of the same scheme.
- Contact your financial institution if you shared account numbers or banking details.
- Visit IdentityTheft.gov if your Social Security number was exposed. They’ll help you create a recovery plan based on the details of your situation.
Romance Scams
Real world tax fraud is only one type of common scam. With the increase in online dating in the past few years, scammers are using it to trick well-meaning people into falling for romance scams, instead of in love. Romance scams are on the rise. It’s important to beware of the red flags to avoid so you don’t lose your financial stability while on the hunt for a partner.
What is a Romance Scam?
A romance scam is when a scammer tricks someone into thinking they’re pursuing a mutually interested romantic relationship. In reality, they’re gathering enough personal information about you and your finances to take advantage of you and then never be seen again. Many do this through a fake online identity so it’s nearly impossible for you to track them down after they take your money.
Romance Scam Red Flags
Even if you go into the online dating scene with intentions to find a partner, the person on the other end may not have the same motivation. It’s easy to say “yes” to situations and ignore warning signs when emotions are high and you’re trying to build trust with your newfound admirer. Imagine you’re talking to a potential (or recurring) date named Steve. Here are some warning signs.
- Steve will never meet in person. Repetitive cancelling of plans, long distance residents, and emergencies can be red flags. Steve likely has no interest in spending time with you because he’s not interested in a relationship. Plus, if you’re able to identify him in real life, it’ll be easier to track him down later when he takes your money.
- Steve shares inconsistent or vague information. Stories that Steve tells you just might not make sense. When he talks about that same situation again, you may notice that details have changed. If you follow up with questions, he may become hesitant or seem uncomfortable.
- Steve seems too good to be true. He may seem like the perfect fit. He claims that he lives in a city you like. He owns a house. He’s a leader with a stable job. He’s passionate about the same hobbies. While some of these scenarios may be true, he could also be faking it to appeal to your emotions.
- Steve asks for money. This is likely the sign that proves that Steve is a romance scammer. He may even ask you to pay in gift cards, which is a common way to ensure that he gets his funds and that you can’t get a refund. Even worse, Steve may ask for your personal information, including your social security number, bank account information, or other sensitive information.
Other Common Scams
Unfortunately, there are other types of scams that can be easy to fall victim to. While many would like to trust people until they are proven untrustworthy, that method doesn’t work with scammers. You may not realize that the scammer is untrustworthy until it’s too late and you’ve lost money, given away personal information, or both.
Charity Scams
During certain times of the year, like the holidays, many nonprofit organizations and charities will ask for donations. You may receive a phone call, email, text, or even see a booth outside of a grocery store. Many charities do good for the community. However, some of these “charities” that may contact you aren’t legit. They weren’t even a charity from the beginning.
When you are contacted by a charity, ask for public information about the charity like their address, phone number, website and EIN number. If they can’t provide this information to you, this is likely a scammer. If you are given a link, don’t click on it. Do some internet sleuthing first to see if the link you received is legit. If anything looks suspicious, it’s probably a scam.
Digital Scams
Phony websites, emails, and texts may not be easy to catch. The goal of these scams is to get the user to send personal financial information to the scammer. Many of the victims of these situations are older adults who are not comfortable using technology.
Inputting personal information anywhere besides a trustworthy online store with a https:// at the beginning of the URL and the padlock symbol is not secure. Your information can easily be shared among scammers and used to make purchases or send scammers your money. Before entering your personal information, look for these two signs for security. If you can’t find them, don’t use the site.
Grandparent Phone Scam
With this scam, an imposter calls an elderly adult claiming to be their grandchild in trouble. The scammer pressures the adult to send personal information or money to the scammer while on the phone. This scam preys on loving grandparents’ emotions who want what is best for their grandkids.
If you receive a call like this and want to confirm if it is real, note the phone number. Is it really your loved one’s phone number? Even if it is, hang up and call the real phone number. Sometimes, scammers can look like they’re calling from one number while actually using another. You can also call the child’s parents and ask about the situation to help determine if the situation is legitimate. If the caller demands secrecy, this is usually a sign that the situation is a scam.
Conclusion
By being aware of common scams and tactics of scammers, you can protect yourself from becoming a victim. Staying safe means staying alert, asking questions, verifying details, and never rushing into a financial decision under pressure. Remember, we are here to help. If you have questions about your financial security, visit a branch or chat with us on the phone or online.
