Tax season is in full swing, which means scammers and identity thieves are out on the prowl. It is crucial that credit unions help educate their members on the potential risks that exist, and ways they can protect themselves better during tax season. Tax-related scams and identity theft can disrupt an individual's finances, credit history and reputation, and the scams take time, money and patience to resolve. Unfortunately, most people still possess the "it will never happen to me" mindset. While there is no foolproof way to guarantee a scammer will not target your finances or identity, there are several preventative steps members can take in order to stay vigilant and protect themselves.
In order for thieves to be successful, they must first gain access to a taxpayer's personal data, including their Social Security number, date of birth or account number. With this information, thieves can open fraudulent credit card accounts or charge existing accounts, obtain loans or jobs, and even receive tax refund payments from the IRS.
The IRS uses taxpayers' Social Security numbers to ensure that filings are accurate and complete prior to issuing a refund. This fact makes Social Security numbers highly desirable to identity thieves attempting to fraudulently obtain others' tax refunds. One of the most common mistakes made by taxpayers is simply carrying their Social Security card in their purse or wallet. Credit unions should encourage members to leave their Social Security cards in a safe place at all times. Additionally, members should be instructed to zealously guard their Social Security number and not provide it every time they are prompted.
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It is very important for credit union members to know the IRS will not initiate contact with taxpayers by phone, email, text message or social media to request personal or financial information. If they are contacted through any of these channels by someone who claims to be from the IRS, they should be coached not to engage or click on any links, as this may be an identity theft or phishing scam.
However, credit union members should not discard mailed IRS notices that state their records show the taxpayer was paid by an employer they do not know, or that more than one tax return was filed under the taxpayer's Social Security number. If this occurs, it is likely that someone has already stolen their information and they should immediately contact the IRS Identity Protection Specialized Unit.
Members should also be taught how to create strong passwords, especially for their tax preparation software or email accounts, which may contain sensitive personal information. Typically, a strong password contains a minimum of eight characters with upper case, lower case, alpha, numerical and special characters. It is recommended to use several passwords across various accounts to ensure that if identity thieves are able to crack one, they cannot gain access to every online account members have opened.
Additionally, credit unions should remind members to regularly monitor their accounts and credit card statements for suspicious activity, and keep a close eye on their credit report. Under federal law, the three major credit union reporting agencies — Equifax, Experian and TransUnion — are each required to provide consumers with one free copy of their credit report each year. Tax season is a wonderful time to exercise this right. Lastly, members should be informed that it is good practice to shred all important documents, as opposed to simply throwing them in the trash.
Tax season certainly will never be enjoyable, but members may avoid the added misery of identity theft simply by learning to pay attention to the details. Credit unions can help empower members to do so by readily providing tips, tools and educational resources like these that are actionable and can be easily implemented.
John Freeman is CFO for EPL, Inc. He can be reached at 205-408-5300 or [email protected].
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