Credit and Debit Card Ratings

IRS Rule Change Targets Identity Thieves

It’s not just big retailers like Target that are grappling with ways to thwart identity theft and fraud. The Internal Revenue Service recently announced plans to limit direct deposits of refunds in an effort to fight criminal activity targeted at taxpayers.

According to a recent article in Accounting Today, the IRS will limit the number of direct deposit refunds that can go into a single account or prepaid debit card to three. Once the IRS has made three electronic deposits into a single account it will automatically issue paper checks for any additional refunds. Any taxpayer who does reach the threshold of three direct deposits will be notified by the IRS that they’ve reached their limit and will receive only paper checks in the future.

The new procedures will go into effect in January of 2015 and are meant to make it more difficult for criminals to steal taxpayer identities and hijack their deposits. Currently, an identity thief or unscrupulous accountant could set up an account or obtain a prepaid debit card into which they could funnel multiple tax refunds. “The new limitations will also protect taxpayers from preparers who obtain payment from their tax preparation services by depositing part or all of their clients’ refunds into the preparers’ own bank accounts,” said the IRS in a statement. “The new direct deposit limits will help eliminate this type of abuse.”

However, the IRS did caution that some responsible taxpayers will be negatively impacted by this change in procedure. For instance, families that file multiple tax returns and have all their refunds direct deposited into a single account will need to either open new accounts or be willing to receive paper checks. Despite the change, the IRS still urges taxpayers to utilize direct deposit. “The vast majority of taxpayers will not be affected by this limitation, and we would encourage taxpayers and tax preparers to continue to use direct deposit,” the IRS said. “It is the fastest, safest way for taxpayers to receive refunds.”

 

 

Author: Chris Warren

  • IRS Rule Change Targets Identity Thieves

    IRS Rule Change Targets Identity Thieves

    It’s not just big retailers like Target that are grappling with ways to thwart identity theft and fraud. The Internal Revenue Service recently announced plans to limit direct deposits of refunds in an effort to fight criminal activity targeted at taxpayers.

    According to a recent article in Accounting Today, the IRS will limit the number of direct deposit refunds that can go into a single account or prepaid debit card to three. Once the IRS has made three electronic deposits into a single account it will automatically issue paper checks for any additional refunds. Any taxpayer who does reach the threshold of three direct deposits will be notified by the IRS that they’ve reached their limit and will receive only paper checks in the future.

    The new procedures will go into effect in January of 2015 and are meant to make it more difficult for criminals to steal taxpayer identities and hijack their deposits. Currently, an identity thief or unscrupulous accountant could set up an account or obtain a prepaid debit card into which they could funnel multiple tax refunds. “The new limitations will also protect taxpayers from preparers who obtain payment from their tax preparation services by depositing part or all of their clients’ refunds into the preparers’ own bank accounts,” said the IRS in a statement. “The new direct deposit limits will help eliminate this type of abuse.”

    However, the IRS did caution that some responsible taxpayers will be negatively impacted by this change in procedure. For instance, families that file multiple tax returns and have all their refunds direct deposited into a single account will need to either open new accounts or be willing to receive paper checks. Despite the change, the IRS still urges taxpayers to utilize direct deposit. “The vast majority of taxpayers will not be affected by this limitation, and we would encourage taxpayers and tax preparers to continue to use direct deposit,” the IRS said. “It is the fastest, safest way for taxpayers to receive refunds.”

     

     

  • A Wave of Debit Card Fraud

    A Wave of Debit Card Fraud

    It’s the sort of call that is becoming unnervingly common these days. Police in the city of Gilbert, Arizona near Phoenix, recently warned that criminals impersonating law enforcement officers were phoning residents and threatening them with arrest unless they pay outstanding traffic tickets. The way to pay the fictitious tickets? By handing over credit card numbers or prepaid debit card PINs.

    In Tuscaloosa, Alabama, another group of recent debit card fraud perpetrators were even more ominous. “We have had a couple of bomb threats in the city of Tuscaloosa. The caller will state if you don’t put so much money on a Green Dot [prepaid] card or the bomb will blow up in an hour,” Sgt. Brent Blankley of the Tuscaloosa Police Department told the local Fox TV channel.

    While the locations and cover stories are different, the use of prepaid debit cards and other plastic forms of payment by scammers is becoming an almost everyday occurrence. In fact, according to a new article on MarketWatch.com over 40 percent of Americans have faced some sort of debit card fraud or credit card scam sometime over the past five years. Not surprisingly, about half of Americans engaged in so-called “risky” financial behavior – everything from writing down a PIN number to carry around in a wallet or not shredding documents with sensitive account information – were victimized.

    Given the constant onslaught by scammers and the successful efforts to obtain customer information from large stores like Target, it’s reasonable for people to take steps to protect themselves from debit card fraud and credit card scams. A start, of course, is not engaging in the sorts of risky behaviors that are easily avoided. The MarketWatch article, citing research conducted by ACI Worldwide and Aite Group, provided a list of five activities to avoid.

    As a start, reporter Priya Anand says leaving a cell phone unlocked is an invitation to criminals to access personal financial information. Despite the risks, 11 percent of Americans don’t protect their phones. Second, over 10 percent of Americans don’t bother to shred documents that include personal financial information before tossing them in the trash. This should be avoided.

    Third, banking or shopping on a public computer, like those available in a library, can make your banking and credit card information easily available to thieves; still, almost 10 percent of Americans do this. Fourth, actually giving out your financial information to the type of scammers operating in Arizona and Alabama is also a bad idea, as is replying to emails requesting your account information. And finally, writing down a PIN and putting it in your wallet or purse could very well get you in financial trouble. But taking simple steps can protect you from debit card fraud and credit card scams.

     

     

     

     

     

     

     

     

     

     

     

     

Credit and Debit Card Ratings