Americans are ignoring basic tax season precautions and best practices that could prevent stolen identities and personal information hacks, according to a new survey from the Scottsdale, Ariz.-based security firm IDT911.

IDT911's fraud center saw a 154% increase in tax-related fraud cases from 2014 to 2015, and there are no signs of this type of fraud slowing down in 2016. The Treasury Inspector General for Tax Administration said it expects tax refund fraud losses to reach an estimated $21 billion by 2016. In addition, the Federal Trade Commission recently announced it received a 47% increase in identity theft complaints in 2015, with tax refund fraud being the biggest contributor by far. These numbers will surely continue to rise if the proper precautions are not taken, the report said.

Despite this and news of data breaches involving the IRS and related service providers, most Americans said they are not worried about the theft of their identities. To make matters worse, a high number of U.S. consumers are ignoring simple precautions and best practices, ID911 warned.

For example, 63% of respondents in a Google Consumer Survey of more than 1,500 adult consumers said they are taking an “it could never happen to me” approach. Nearly one in five respondents said they did not even password-protect their Wi-Fi networks when they filed online from home.

This risky behavior goes beyond the digital world, as 49% of all Americans do not even lock their mailboxes when expecting their refunds through the mail, leaving a cache of sensitive personal information out in the open for anyone to steal.

Adding to potential tax season turbulence, 38% of Americans said they are unsure of how to substantiate a tax preparer's credibility. Meanwhile, only 12% planned on filing in January despite the fact that experts commonly advised consumers to file as early as possible in order to beat potential identity thieves to the punch.

Americans' lax approach to protecting personal information, combined with the increasingly sophisticated tactics carried out by identity thieves, has resulted in a sharp increase in related fraud incidents in recent years.

According to the report, it also appeared that many Americans may not know where to go when they are eventually impacted. More than one third (38%) said they are not sure if their financial services or insurance providers offer identity theft or fraud protection services. The majority of respondents (57%) said their financial institution would be the first entity they would contact once they learned they were a victim of a data breach.

“Tax season has become fraud season,” Adam Levin, chairman and founder of IDT911 and author of Swiped, said. “As breaches have become the third certainty in life, cybercriminals are able to glean information from literally hundreds of millions of compromised records in order to target consumers in tax related identity theft and phishing schemes. In today's dangerous digital world, each of us must be vigilant and remain on high alert. Consumers need to combat fraud by following the 3Ms: Minimize their risk of exposure, monitor their bank and credit card accounts on a daily basis and know how – or where – to find professionals who can help them effectively manage the damage, by using resolution resources provided by financial services institutions, insurance providers and the HR departments of their employers.”

Additional key findings in the report included the following:

  • More than half of respondents (52%) said they do not trust, or are not sure if they trust, online tax services. This is likely due to the recent data breaches of multiple providers.
  • Millennials (aged 18-34) were overwhelmingly unsure of how to vet the credibility of a tax preparer (92%).
  • Despite the uptick in tax-related identity-theft incidents, most Americans (48%) believe the holiday shopping season is the most risky time of year. Tax filing season came in second at 30%.

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Roy Urrico

Roy W. Urrico specializes in articles about financial technology and services for Credit Union Times, as well as ghostwriting, copywriting, and case studies. Also: writer/editor of a semi-annual newsletter for Association for Financial Technology since 1997 and history projects funded by the U.S Interior Department, National Park Service and Warren County (N.Y.).