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Criminals aren’t taking time off for the summer, and neither should you when it comes to protecting financial accounts. Keeping your guard up against fraud, scams and identity theft is a full-time pursuit.
The threats extend from divulging too much personal information to having your tax refund stolen. Here are some of the problems and some tips that can help:
Few good reasons to reveal your Social Security number
If a gym asked for your email password to sign you up for a membership, you likely would decline. But if the company asked for your Social Security number, you might provide it.
“From gym memberships to job applications, we treat this nine-digit number as a standard piece of information to hand out willingly,” said Raj Ananthanpillai, founder and CEO of Trua, an identification screening and verification company. “The odds are that you are trusting too many people with it.”
Ananthanpillai argues that consumers should divulge Social Security numbers much more carefully, partly because they can end up in data breaches. You should use your number only for purposes directly related to employment income, reporting/paying taxes and opening bank and other financial accounts, he said.
“For literally everyone else, I want you to ask them what the purpose is, ask them whom they will share it with (and) ask them how long it will be stored on their servers.”
Ananthanpillai’s company, Trua, collects vital information from customers, stores it and confirms identities when needed without revealing the underlying information. He acknowledges that it isn’t always easy to decline requests for a Social Security number, but he suggests first asking if you can provide other, less-sensitive identifiers.
“I’m not promising you that you will be able to avoid sharing your SSN, nor am I promising you that you will make a ton of friends in this process, but you will become a better advocate for yourself,” he said in a statement.
Beyond data breaches:Cybercriminals are focusing on a new target for identity theft: You.
Even the threat of fraud can delay your tax refund
Tax fraud is a big issue, and the Internal Revenue Service notifies taxpayers by letter if it suspects identity theft. “Scammers sometimes use stolen Social Security numbers to file fraudulent tax returns and collect refunds,” the agency said in a recent alert.
To combat this, the IRS said it scans every tax return for signs of fraud. If an initial scan detects returns that could be suspicious, the agency reviews them more carefully and sends a letter to taxpayers informing them of the potential for identity theft. The IRS said it won’t process suspicious returns until the taxpayer responds.
The IRS letters instruct taxpayers to verify their identities and tax information in various ways, either by using the irs.gov website, calling a Taxpayer Protection hotline listed on the letter or visiting a local IRS office or Taxpayer Assistance Center.
You should pay prompt attention if you receive a letter. The IRS has faced problems with “false positives,” or situations where it suspected foul play and held up refunds on returns that were ultimately deemed legitimate. Over the first nine months of 2018, for instance, the agency protected $7.6 billion in refunds from scammers but also delayed processing $20 billion in refunds on legitimate returns, the watchdog Taxpayer Advocate Service reported.
A telltale scam indicator: Gift cards
Scams and frauds rank among the most common complaints made by consumers. They range from falsified unemployment claims made in a victim’s name to cell phone accounts opened in an innocent person’s name, reports the Consumer Federation of America, which surveyed city, county and state consumer organizations and then analyzed the data.
Fraud-defense tips offered by the Consumer Federation include never clicking on links contained in unfamiliar text messages and resisting requests for payments using gift cards. Gift-card requests are “almost always a scam,” the group said. Requests for payment in cryptocurrencies probably aren’t far behind.
Scams/frauds ranked as the sixth most prevalent type of consumer complaint, according to the study.
Even more prevalent consumer gripes include those centered around automotive sales/repairs (prices, advertised claims and mechanical defects, for example), home-improvement contractors/repairs (licensing and the quality and completion of work), debt/credit issues (including loans, debt collection and credit reporting), retail purchases (such as late deliveries, defective products or refund policies) and landlord-tenant disputes (over housing conditions, security deposits and rent increases).
Deposit insurance usually doesn’t extend to apps
This one isn’t a scam, but people who park money in payment apps such as PayPal, Venmo and Cash App should know that their accounts probably aren’t covered by FDIC deposit insurance as in traditional bank accounts (or similar insurance with credit unions).
“Popular digital-payment apps are increasingly used as substitutes for a traditional bank or credit union account but lack the same protections,” said Rohit Chopra, director of the federal Consumer Financial Protection Bureau, which recently issued an alert on the topic. Nonbank payment apps have expanded rapidly in recent years. They allow consumers to pay retailers quickly while providing the option for consumers to store funds, the CFPB noted.
Some apps might provide pass-through insurance via arrangements with a bank or credit union for customers who sign up for additional services, but it’s a gray area and worth checking. Any pass-through insurance would cover losses if the bank or credit union failed but not if the payment-app company went under, the CFPB said.
Reach the writer at [email protected].
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