It's tax time, and for hackers, it's their favorite time of the year.
With the amount of personal and financial information traveling through cyberspace, there are plenty of opportunities for them to steal personally identifiable information (PII), tax refunds and other personal details about taxpayers.
Poor safety practices
According to CyberScout, a data security and identity theft protection firm, most tax payers still aren't worried about tax fraud, despite warnings from the government and other entities. In its second annual Tax Season Risk Report, poor safety practices and a lack of concern for their data security are leaving consumers extremely vulnerable to hackers.
In 2015, over 700,000 taxpayer accounts were compromised, and since then the Internal Revenue Service (IRS) has implemented a number of changes to mitigate tax fraud and identity theft for taxpayers. The efforts seem to be paying off, as the number of identity theft affidavits filed with the IRS dropped 50 percent in the first nine months of 2016.
Catching fraudulent returns
In addition, the number of fraudulent returns identified before they were processed also confirms the new efforts are working, as 50 percent fewer fraudulent returns made it through the IRS tax processing system. By September 2016, 787,000 fraudulent returns totaling more than $4 billion had been caught by the process. Catching these fraudulent returns also means fewer fraudulent refunds paid by financial institutions. In 2015, banks paid $829 million in fraudulent refunds, but that number dropped to $239 in 2016.
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Patricia L. Harman
Patricia L. Harman is the editor-in-chief of Claims magazine, a contributing editor to PropertyCasualty360.com, and chairs the annual America's Claims Event (ACE), which focuses on providing claims professionals with cutting-edge education and networking opportunities. She covers auto, property & casualty, workers' compensation, fraud, risk and cybersecurity, and is a frequent speaker at insurance industry events. Contact her at [email protected]
