Tax season is upon us — and scammers know it. While we’d all like to think we could outwit someone who tries to defraud us, the truth is that these criminals prey on some of our biggest fears and often see substantial results. In fact, the US Treasury Department reported that more than 10,000 people have fallen victim to tax phone scams since October 2013, representing more than $54 million in lost funds. Although certain scams have been around for quite some time, authorities are warning the public to be on the lookout for phone fraudsters who try to scare Americans into paying back taxes, hospital bills, and other debts with iTunes gift cards.
Considering that the average cost of one day spent in a US hospital is $2738, it’s no surprise that many Americans are worried about debt. Being contacted by the IRS may be your biggest nightmare, especially if you’ve had financial troubles in the past. Scammers know this and use threats of police arrests to convince fraud victims to hand over their money.
The caller will usually tell the victim to purchase an iTunes gift card from a local retailer to pay off their taxes or other debts and share the 16-digit code with the caller. Doing so will essentially act like a wire transfer of funds — with little to no hope of ever getting that money back once it’s drained of cash.
According to a 2020 Federal Reserve study, more than 86.4 billion debit card transactions were recorded in 2018, which is the latest year for which this data is available. But it might surprise you to learn than these scammers would much rather have an iTunes gift card than your debit or credit card number. That’s because these gift cards are much harder to trace. Your bank likely offers fraud protection if someone steals your card info, but when you give a criminal a gift card number, there’s very little that can be done other than reporting the call to the IRS after the fact.
The most important thing to keep in mind here is that the IRS will never call you and demand immediate payment — especially not with a specific payment method like prepaid debit cards, gift cards, of wire transfers. They will also never threaten to have you arrested. If you’re contacted by the IRS, you’ll usually receive written correspondence first. Taxpayers also have the right to appeal any amount the IRS says they owe.
Unfortunately, these scammers will stop at nothing to scheme Americans out of their hard-earned money. And millennials are actually more likely to fall victims to this type of fraud than senior citizens are; although seniors tend to lose more money in such instances.
The methods may keep changing, but the proper response remains the same. If you get a call that seems suspicious and the caller demands payment over the phone, hang up and report the call to the IRS and your local authorities. Never give out personal information over the phone — including payment information — and be especially wary of anyone who contacts you to make a threat.
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