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How Do I Stop Obamacare Identity Theft? [Burning Questions Ep. 3]

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Today marks the start of the Affordable Care Act (aka Obamacare). As with any new, massive, government-sponsored program, scammers and identity thieves will try to take advantage of the public’s confusion and unfamiliarity with the new Health Exchanges (which we’re calling Obamacare Identity Theft).

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Identity Thieves Score Billions from the IRS and Taxpayers

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Every dollar counts, now more than ever, as the government searches for ways to wisely spend our money. It’s dismaying to learn that an audit report from the Treasury Inspector General for Tax Administration (TIGTA) has found that the impact of identity theft on tax administration is significantly greater than the amount the IRS detects and prevents. Even worse, the “IRS uses little of the data from identity theft cases…to detect and prevent future tax refund fraud” according to Mike Godfrey, Tax-News.

  • The IRS is detecting far fewer fake tax returns than are actually falsely filed. 938,700 were detected in 2011. On the other hand, TIGTA identified 1.5M additional undetected tax returns in 2011 with potentially fraudulent tax refunds totaling in excess of $5.2B.
  • The study predicted that the IRS stands to lose $21B in revenue over the next 5 years with new fraud controls, or $26B without the new controls.
  • Key victims include the deceased, children, or someone who would not normally file a return such as lower income individuals that are not legally required to file.
  • A Postal Inspector in Florida uncovered a tax refund scheme whereby refunds were going into debit-card accounts via thieves using the social security numbers (SSN) of dead people. Direct deposit is preferred as it doesn’t require a mailing address, photo ID, name or a trip to the bank.
  • The IRS allows multiple direct deposits to the same bank account. A key finding in the report showed hundreds of tax returns were filed from a single address. In one case, 2,137 returns resulted in $3.3M in refunds to a home in Lansing, Michigan, and 518 returns resulted in $1.8M in refunds to a home in Tampa, Florida.
  • The IRS lacks access to 3rd party information to verify returns and root out fraud. It is issuing refunds in January before it can verify data from employers and financial institutions in March. This gap provides a huge window of opportunity for thieves.
  • The IRS is not gathering enough information to prevent fraud; i.e., how the return is filed, income information on the W-2, the amount of the refund and where the refund is sent.
  • New screening filters that can identify false tax returns before they are processed have the potential to diminish the number of fraud cases as well as other ongoing anti-fraud procedures employed by the IRS. It is placing a unique identity theft indicator on the accounts of the deceased. As of March, 2012, 164,000 accounts were locked, possibly preventing $1.8M in fraud.

Charles Boustany, the US House of Representatives Oversight Subcommitte Chairman, who sent a letter to the IRS demanding a full accounting for the agency’s continued inability to stop tax fraud related to identity theft, declared that “this report raises serious questions regarding the IRS’s ability to detect tax fraud…”. The lost federal money is extremely troubling but there’s another loss to consider – the potential to erode taxpayer confidence in our system of tax administration.


John Sileo is an award-winning author and international speaker on the dark art of deception (identity theft, data privacy, social media manipulation) and its polar opposite, the powerful use of trust, to achieve success. He is CEO of The Sileo Group, which advises teams on how to multiply performance by building a culture of deep trust. His clients include the Department of Defense, Pfizer, the FDIC, and Homeland Security. Sample his Keynote Presentation or watch him on Anderson Cooper, 60 Minutes or Fox Business. 1.800.258.8076.

IRS Overwhelmed by Tax Related Identity Theft

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It’s nerve racking to realize that the IRS increasingly struggles to control taxpayer identity theft. Since 2008, the IRS has identified 470,000 incidents of identity theft affecting more than 390,000 taxpayers. “Victims of tax-related identity theft are the casualties of a system ill-equipped to deal with the growing proficiency and sophistication of today’s tax scam artists” said  Sen. Bill Nelson, who chairs the newly formed Subcommittee on Fiscal Responsibility and Economic Growth.

Identity theft harms innocent taxpayers through (1) employment and (2) refund fraud, according to the GAO. In refund fraud, an identity thief uses a taxpayer’s name and Social Security number to file for a tax refund, which the IRS discovers after the legitimate taxpayer files. In the meantime, the victim is out the money due her, causing Sharon Hawa of the Bronx, N.Y. to take on a second job. Ms. Hawa testified before the Subcommittee, describing how she had become an ID theft victim for the second time in three years (the first in 2009) after thieves twice filed tax returns in her name and received her tax refunds. Painstakingly proving her identity to the IRS, time after time over a 14-month period, was only a small part of the stress and utter frustration in the first fraud.  And  then, as if that trauma hadn’t sufficiently wreaked havoc in Ms. Hawa’s life, it happened a second time.

In employment fraud, an identity thief uses a taxpayer’s name and SSN to obtain a job. When the thief’s employer reports income to the IRS, the taxpayer appears to have unreported income on his or her return, leading to enforcement action. Think of your stress level when you open that envelope from the IRS demanding taxes for money you didn’t earn and don’t have!

The GAO states that the IRS’s ability to address identity theft issues is constrained by several factors, one being that privacy laws limit the sharing of ID theft information with other agencies. Another problem is the timing of fraud detection efforts; more than a year may have passed since the original fraud occurred.  The resources necessary to pursue the large volume of potential criminal refund and employment fraud cases are another constraint.

It’s imperative that we taxpayers take responsibility and implement the steps necessary to protect ourselves. There is very little that is more damaging and dangerous to your identity than losing your tax records. After all, tax records generally contain the most sensitive personally identifying information that you own, including Social Security Numbers (for you, your spouse and maybe even your kids), names, addresses, employers, net worth, etc. Because of this high concentration of sensitive data, tax time is like an all-you-can-eat buffet for identity thieves. Here are some of the dishes on which they greedily feed:

  • Tax documents exposed on your desk (home and work)
  • Private information that sits unprotected in your tax-preparer’s office
  • Improperly mailed, emailed and digitally transmitted or filed records
  • Photocopiers with hard drives that store a digital copy of your tax forms
  • Copies of sensitive documents that get thrown out without being shredded
  • Improperly stored and locked documents once your return is filed
  • Tax-time scams that take advantage of our propensity to do whatever the IRS says (even if it’s not really the IRS asking)
Your tax returns are the Holy Grail of identity theft because they contain virtually every piece of information a tax fraudster needs to BECOME you. But you don’t have to be a victim; you simply need to take responsibility for what is rightfully yours – your identity. Sileo.com has compiled a comprehensive list of tax time frauds, scams and prevention techniques.

John Sileo is an award-winning author and international speaker on the dark art of deception (identity theft, data privacy, social media manipulation) and its polar opposite, the powerful use of trust, to achieve success. He is CEO of The Sileo Group, which advises teams on how to multiply performance by building a culture of deep trust. His clients include the Department of Defense, Pfizer, the FDIC, and Homeland Security. Sample his Keynote Presentation (he shares how he lost $300,000, 2 years and his business to data breach) or watch him on Anderson Cooper, 60 Minutes or Fox Business. 1.800.258.8076.

Commonly Overlooked Sources of Identity Theft

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You’ve heard it all before – conduct online business through secure Wi-Fi only, watch your incoming mail for erroneous credit invitations, check your statements and your credit reports, and set up strong passwords and alerts, yada yada! But here are a few additional times you’ll want to be vigilant, especially this holiday season!

  1. Car Loans. According to the Financial Crimes Enforcement Network, auto loan identity theft is twice as high as any other form. Most dealerships have you complete paperwork with identifying personal data (name, address, date of birth, phone number) up to and including a loan application, which likely includes your Social Security Number. How is this data handled? Unless you actually purchase the vehicle, and your paperwork becomes part of a permanent file, refuse to complete it. Most dealerships simply toss your paperwork after 30 days if you don’t make a purchase. Their trash receptacle then becomes a pre-qualified source for identity thieves.
  2. The Pharmacy. Pharmacy records contain your personal identifying information (name, address, date of birth, phone number, insurance plan information, employer and often, your Social Security number). Thieves look anywhere for taking basic information to build a new identity, or to re-fill prescriptions that they can then sell. Make sure your pharmacy asks for your ID, and request confirmation that they shred personal data.
  3. Doctor’s Office. This can be very serious, especially if a thief has manipulated your medical history through stealing your identity. When you fill out the requested forms at a physician’s office, do not put your Social Security number on the form. There is no reason the office needs this unless you are requesting some type of “loan” from them. Much of today’s information is sent via the Internet. Ask them what protections they have in place to safeguard your information. Many have installed firewalls, and other software, to help insure patient information safety, but many have not. If any medical facility or physician that you don’t recognize calls you asking for personal or medical information, question them. Ask who they are, why they need the information, what doctor referred them and if they have a number where you can call them back with this information. Verify their credentials. If you access your medical information online, read the facility’s privacy policy, as they are all required to have one posted. Read what information they collect, who they share their files with, ensure they have an encrypted site, and be very careful if you are accessing those files from a Wi-Fi location where your computer may be vulnerable to hacking.
  4. Mortgage ID Theft. The house you’re living in may not be yours. An identity thief will obtain your personal information and use it to obtain a home loan, or an equity loan, without your knowledge. An equity loan gives the criminal quick cash. Using the value of a home is one of the easiest ways to secure cash. There have been cases where the thieves have actually sold the victim’s home while they were still living in it, and were unaware they’d been victimized. Second homes and vacation homes are especially vulnerable to this type of identity theft, as it allows the thieves a longer period of time to get cash out of the property, or sell it before the real owner is aware there is a problem. All homeowners should routinely check with their county record’s office to ensure that their information is correct. If you receive any paperwork regarding your mortgage, a transfer of your mortgage or lender, don’t toss it out, pay attention because it may be the only warning you get until a new owner is knocking at your door.
  5. Cyber Greeting Cards. As we head into the holiday season, a new method of hacking into your computer is lurking in those adorable greeting cards sitting in your e-mail. It blinks at you saying you’ve been sent a greeting from a “friend.”

You open it and are directed to a site where malware will invade your computer, or you will be asked to “install” software to “play” the card. When this happens, malware, that could potentially destroy your computer or allow an identity thief access to your personal data, is unleashed. Unless the name of a real person that you know is attached to the greeting card, do not open it.

The Bottom Line

There is no way to protect your identity 100% of the time. Often, what happens to your personal information is completely out of your control. The only option you have is to be constantly diligent in tracking your information, protecting your information and asking where that information is going. You have the right to ask, you have the right to know and you have the right to withdraw that information if you feel uncomfortable.

Original story – 5 Overlooked Places Where Your Identity Can Be Stolen

 

 

ID Theft Mastermind Gets 9 Years

UPI.com wrote a story on the punishment for a recent Identity Theft case which shows how sentencing is finally catching up to the severity of this crime.

A Florida man who admitted masterminding an identity theft ring has been sentenced to nine years in federal prison and ordered to pay restitution.

Oscar Diaz and his confederates used items stolen from parked cars to get money from their victims’ bank accounts, the South Florida Sun Sentinel reported. Prosecutors say they stole from people attending funerals.

“Diaz’s co-conspirators would even follow funeral processions in order to target cars parked at graveyards,” a release from Maryland U.S. Attorney Rod J. Rosenstein said.

Diaz, 30, of Fort Lauderdale pleaded guilty in U.S. District Court in Baltimore earlier this month to aggravated identity theft and conspiracy to commit bank fraud. At a hearing Friday he was ordered to pay the victims $130,000.

Investigators said Diaz and seven others, most of them from the Fort Lauderdale area, stole at least $200,000 during a few months in 2009. They stole identification from cars parked outside day-care centers, supermarkets and churches and used it to impersonate the victims at their banks.

Diaz’s co-defendants have already pleaded guilty and are awaiting sentencing.

John Sileo speaks on information control, identity theft prevention and data breach avoidance. His clients include the Department of Defense, Pfizer and the FDIC. To learn more, contact him directly on 800.258.8076.

Tax Time Identity Theft Prevention Tips

Identity theft speaker John Sileo shares his tax-time identity theft prevention tips.

This past week, I have been helping a gentleman recover from the theft of all of his tax records.  Before it is all over, this gentleman will have spent hundreds of hours and thousands of dollars simply preventing any further fraudulent use of his identity. That doesn’t account for any damages already done to his finances, criminal record, medical records or social security benefits. There is very little that is more damaging and dangerous to your identity than losing your tax records. After all, tax records generally contain the most sensitive personally identifying information that you own, including Social Security Numbers (for you, your spouse and maybe even your kids), names, addresses, employers, net worth, etc. Because of this high concentration of sensitive data, tax time is like an all-you-can-eat buffet for identity thieves. Here are some of the dishes on which they greedily feed:

  • Tax documents exposed on your desk (home and work)
  • Private information that sits unprotected in your tax-preparer’s office
  • Improperly mailed, emailed and digitally transmitted or filed records
  • Photocopiers with hard drives that store a digital copy of your tax forms
  • Copies of sensitive documents that get thrown out without being shredded
  • Improperly stored and locked documents once your return is filed
  • Tax-time scams that take advantage of our propensity to do whatever the IRS says (even if it’s not really the IRS asking)

Top Tips for Tax Time Identity Theft Protection Safe Preparation. Your greatest risk of identity theft during tax season comes from your tax preparer (if you use one) either because they are dishonest (less likely) or because they are careless with your sensitive documents (more likely). Just walk into a tax-preparers office on April 1 and ask yourself how easy it would be to walk off with a few client folders containing mounds of profitable identity. The devil is in the disorganization. Effective Solutions:

  • Choose your preparer wisely. How well do you know the person and company preparing your taxes? Did they come personally recommended, or could they be earning cash on the side by selling your personal information. Do they have an established record and are they recommended by the Better Business Bureau?
  • Interview your preparer before you turn over sensitive information. Ask them exactly how they protect your privacy (do they have a privacy policy?). Are they meeting with you in a room full of client files, or do they take you to a neutral, data-free, conference room or office? Do they leave files out on their desk for the cleaning service to access at night, or do they lock your documents in a filing cabinet or behind a secure office door? Do they protect their computers with everything listed in the next section?
  • Asking professional tax preparers these questions sends them a message that you are watching! Identity thieves tend to stay away from people they know are actively monitoring for fraud. Remember, losing your identity inside of their accounting or bookkeeping business poses a tremendous legal liability to their livelihood.

Secure Computers. Last year, more than 80 million Americans filed their tax returns electronically. To prevent electronic identity theft, you must take the necessary steps to protect your computer, network and wireless connection. Additionally, your tax preparer should be working only on a secured computer, network and internet connection. Hire a professional to implement the following security measures:

  • Strong alpha-numeric passwords that keep strangers out of your system
  • Anti-virus and anti-spyware software configured with automatic updates
  • Encrypted hard drives or folders (especially for your tax preparer)
  • Automatic operating system updates and security patches
  • An encrypted wireless network protection
  • A firewall between your computer and the internet
  • Remove all file-sharing programs from your computer (limewire, napster, etc.)

Private information should be transmitted by phone using your cell or land line (don’t use cordless phones). In addition, never email your private information to anyone unless you are totally confident that you are using encrypted email. This is a rarity, so don’t assume you have it. In a pinch, you can email password protected PDF documents, though these are relatively easy to hack. Stop Falling for IRS Scams. We have a heightened response mechanism during tax season; we don’t want to raise any red flags with the IRS, so we tend to give our personal information without much thought. We are primed to be socially engineered. Here’s how to combat the problem:

  • Make your default answer, “No”. When someone asks for your Social Security Number or other identifying information, refuse until you are completely comfortable that they are legitimate. Verify their credentials by calling them back on a published number for the IRS.
  • If someone promises you (by phone, fax, mail, or in person) to drastically reduce your tax bill or speed up your tax return, don’t believe them until you have done your homework (call the IRS directly if you have to). These schemes flourish when the government issues economic stimulus checks and IRS refunds.
  • If anyone asks you for information in order to send you your check, they are scamming for your identity. The IRS already knows where you live (and where to send your rebate)! By the way, the IRS will NEVER email you for any reason (e.g., promising a refund, requesting information, threatening you).
  • To learn more about IRS scams, visit the only legitimate IRS website, which is www.irs.gov. If you are hit by an IRS scam, contact the IRS’s Taxpayer Advocate Service at www.irs.gov/advocate.

Mail Safely. A good deal of identity theft takes place while tax documents or supporting material are being sent through the mail. If you are sending your tax return through the mail, follow these steps:

  • Walk the envelope inside of the post office and hand it to an employee. Too much mail is stolen out of the blue USPS mailboxes and driveway mailboxes that we use for everything else to make them safe.
  • Send your return by certified mail so that you know it has arrived safely. This sends a message to each mail carrier that they had better provide extra protection to the document they are carrying.
  • Consider filing electronically so that you take mail out of the equation. Make sure that you have a well-protected computer (discussed above).

Shred and Store Safely. Any copies of tax documents that you no longer need can be shredded using a confetti shredder. Store all tax records, documents and related materials in a secure fire safe. I recommend spending the extra money to have your safe bolted into your home so that a thief can’t walk away with your entire identity portfolio. Make sure that your tax provider appropriately destroys and locks up any lingering pieces of your identity as well. Tax returns provide more of your private information in a single place than almost any other document in our lives. Don’t waste your tax refund recovering from this crime.

John Sileo became one of America’s leading Social Networking Speakers & sought after Identity Theft Experts after he lost his business and more than $300,000 to identity theft and data breach. His clients include the Department of Defense, Pfizer and the FDIC. To learn more about having him speak at your next meeting or conference, contact him by email or on 800.258.8076.

Javelin Identity Theft & Identity Fraud 2009 Survey

A few weeks ago, Javelin Safety & Research  released its comprehensive survey on Identity Theft & Fraud for the fifth consecutive year.

Let me boil it down to the Top 5 Identity Theft Findings that impact you (and my comments and opinions in parentheses):

  1. Overall Identity Fraud Incidents Increased in the United States (the problem is getting worse as the economy sinks and people turn to crime to pay their bills)
  2. Costs to Consumers are Down (businesses are being forced to take greater responsibility for the liabilities and costs of identity theft – in other words, the burden is shifting from the consumer to corporate America)
  3. Fraudsters are Moving Much More Quickly (the crime of identity theft is moving from garden variety criminals into the hands of organized crime)
  4. Gender Disparity—Women were 26 percent more likely to be victims of identity fraud than men in 2008 (three factors: 1. women’s purses contain more identity; 2. women are less cynical and more trusting of others [a generalization that proves itself anecdotally in my identity theft speeches every week – it is much easier to get a purse from a woman than a wallet from a man]; 3. more women than men are responsible for household finances, putting them at higher risk of losing the data
  5. Low-tech Methods Still Most Popular (technology is an enabler of this crime, but not a root cause – see my post on this topic)

Conclusion? Identity theft isn’t going away – until we deal with it personally, in our corporate boardrooms and legislatively, it will continue to be America’s fastest growing crime.

For more information, check out the Javelin Press Release here:

http://www.idsafety.net/Javelin2009IdentityFraudSurveyPressRelease.pdf

You can download the entire Fraud Report 2009 here:

http://www.idsafety.net/report.html

John Sileo, Identity Theft Speaker and Fan of Javelin’s Studies

The 7 Deadly Sins of Privacy Leadership: How CEOs Enable Data Breach

Technology is not the root cause of identity theft, data breach or cyber crime.

We are.

Too often, technology is our scapegoat, providing a convenient excuse to sit apathetically in our corner offices, unwilling to put our money where our profits are. Unwilling, in this case, to even gaze over at the enormous profit-sucking sound that is mass data theft. The deeper cause of this crisis festers in the boardrooms of corporate America. Like an overflowing river, poor privacy leadership flows inexorably downhill from the CEO, until at last, it undermines the very banks that contain it.

The identity theft and data breach bottom line? Read more

Eglin AFB Stumps the Identity Theft Expert

Military ImagesI just finished delivering an identity theft speech for the Department of Defense to the Airmen and Women of Eglin Air Force Base in Ft. Walton, Florida. It is the highest honor for me to be able to serve the United States military, who so valiantly and humbly serve every American. Thank you Eglin AFB, and a special thanks to the person who asked me to clarify this question after the speech:

Is LifeLock identity theft monitoring service truly free to military personnel, or is it just for certain personnel? Read more

Identity Thieves Targeting Home Equity Lines of Credit

As the economy continues to decline, people are finding creative ways to increase how much they make. Unfortunately, dishonest people often turn to dishonest means, such as identity theft, to increase their net worth.

It seems that home equity lines of credit (HELOCs) are the latest in a series of financial devices that identity thieves are using to undermine your net worth. As Jay MacDonald of Bankrate.com points out in a CNBC article:

…now that the door to subprime lending has slammed shut, thieves have set their sights on those with good credit and substantial equity in their homes — deep pools of cash that can be easily tapped via a HELOC.

Sharks in deep pools
The FBI says HELOC thieves typically use stolen identification to apply online for a line of credit in your name. Then they instruct the bank to wire the funds to their accounts, providing their own contact information in place of yours. That way, the bank unwittingly contacts the thief to verify the electronic funds transfer.

To learn more, read the entire article: ID Thieves Tap Home Equity Lines.

John Sileo
Financial Keynote Speaker