It’s that time of year – tax time.
This week, the Federal Trade Commission (FTC) kicked off its annual “Tax Identity Theft Awareness Week.” According to the FTC, there was a 47 percent increase in identity theft complaints in 2015 with the biggest factor to that being tax refund fraud. This is due, in large part, to the widespread data breaches that have compromised millions of individuals’ personal identifiable information (PII).
According to security blogger Brian Krebs, in a recent article, the “FTC released new stats showing that the agency received more than 490,000 identity theft complaints last year, a 47 percent increase over 2014. In a conference call with the news media, FTC Chairwoman Edith Ramirez called tax refund fraud ‘the largest and fastest growing ID theft category’ that the commission tracks.”
What is Tax Identity Theft?
This kind of identity theft happens when someone files a fake tax return using your personal information – like your Social Security number – to get a tax refund. Tax identity theft also happens when someone uses your Social Security number to get a job. You find out about it when you get a letter from the IRS saying: more than one tax return was filed in your name, or IRS records show wages from an employer you don’t know.
Widespread Data Breaches and the Rise of the Perfect Identity
In 2015, data breaches have been widespread making countless identities available for sale on black markets that can be accessed, for example, on the Dark Web. The stolen data from breaches like at the U.S. Office of Personnel Management (OPM) and Anthem (more than 100 million individuals’ PII alone), as well as other identity theft schemes, contains enough personal information on a consumer for a fraudster to accurately impersonate that individual. We call these compromised identities “Perfect Identities,” as the data essentially appears to be “perfect.”
This is where fraudsters capitalize – they can purchase a perfect identity and attempt to commit tax fraud. Today, simply verifying an individual’s identity in the tax landscape isn’t enough. Tax organizations must take it further.
This is where a robust and multi-layered identity verification and fraud prevention platform is mission critical. By looking at an array of attributes including, identity, device, activity, location and other attributes, tax organizations are able to determine if the individual filing is a legitimate citizen, a fraudster, or, if they aren’t able to determine if the transaction is legitimate, the then have the ability to add layers of verification to ensure the legitimacy of the transaction.
To find out how IDology helps stop tax fraud, visit https://www.idology.com/resources/identity-for-the-tax-industry, or call a representative today at (866) 520-1234.