Broker Check
Financial Watch | August 2020

Financial Watch | August 2020

August 18, 2020
Share |

5 Ways You Can Protect Against the Growing Number of Tax Scams in 2020

Just when you thought you had enough to be concerned with, the Internal Revenue Service (IRS) revealed it’s annual "Dirty Dozen" list of tax scams in July, with a special emphasis on aggressive and evolving schemes related to coronavirus tax relief. According to IRS Commissioner Chuck Rettig, tax scams tend to rise during times of crisis, and scam artists are using the COVID-19 pandemic to try to “steal money and information from honest taxpayers.”1

The following make up the top five scams on this year’s Dirty Dozen list:

  1. Phishing scams: using fake emails or websites, scammers try to steal personal information. 
  2. Fake charities: steal from well-intentioned people trying to help in times of need.
  3. Threatening impersonator phone calls: also known as “vishing” or voice phishing, these include threats of arrest, deportation or license revocation if the victim doesn't pay a bogus tax bill. 
  4. Social media scams: try to convince potential victims that they are dealing with a person close to them that they trust via email, text or social media messaging.
  5. EIP or refund theft: while tax refund fraud continues to rise each year, criminals have turned their attention in 2020 to stealing Economic Impact Payments provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Don't Be the Next Victim

The IRS is hardly alone among government agencies and watchdogs reporting a spike in scams and cyberattacks during the COVID-19 pandemic. The FBI’s Internet Crime Complaint Center has reported thousands of complaints about coronavirus-related scams. By early August 2020, the Federal Trade Commission (FTC) had logged more than 160,000 consumer complaints related to COVID-19 and stimulus payments, with two-thirds involving fraud or identity theft. Victims have reported losing $105.7 million, with a median loss of $280 per person.

Fortunately, agencies and organization are doing more than simply recording these crimes. The Federal Communications Commission set up a dedicated website with information on COVID-19 phone scams, and in May, Google also got into the act, rolling out its new Scam Spotter program. Co-created with the Cybercrime Support Network, the program recommends a three-step process for individuals to consider before handing over personal information through a phone call or email. 

5 Ways You Can Fight Back

Consider the following tips to avoid phishing, fraud, and related financial scams:

  1. Don’t give out your account information in response to calls, email or texts soliciting personal account information.
  2. Beware of text messages or emails that insist you act now. Phishing emails often try to create a sense of urgency, or demand immediate action, hoping you’ll click on a link right now.
  3. Avoid clicking links in texts or emails from unknown or unverified sources. This can lead to  malware being placed on your electronic devices to gain access to your personal information.
  4. Refuse to engage. End the call or delete the texts or emails. Mark the phone number or email as spam and block the sender.
  5. Follow the FTC’s advice. The FTC recommends that you:
    - Learn how to tell the difference between a contact tracer and a scammer.
    - Don’t respond to texts, emails, or calls about checks from the government.
    - Watch for emails claiming to be from the CDC or the World Health Organization. Use sites like coronavirus.gov and usa.gov/coronavirus to get the latest information. 
    - Never donate in cash, by gift card, or by wiring money.

Remember, your best defense against scams that seek to separate you from your money is a good offense. It pays to take the time to do your homework and know who you’re dealing with before engaging with them. For more information and tips on safeguarding your financial accounts and protecting against identity theft, visit the IRS or FTC online.


1 https://www.irs.gov/newsroom/irs-unveils-dirty-dozen-list-of-tax-scams-for-2020-americans-urged-to-be-vigilant-to-these-threats-during-the-pandemic-and-its-aftermath

2 https://www.aarp.org/money/scams-fraud/info-2020/coronavirus.html