Eight ways to reduce your clients’ exposure to tax fraud

Eight ways to reduce your clients’ exposure to tax fraud | Insurance Business

Eight ways to reduce your clients’ exposure to tax fraud

Tax season is approaching fast. Hooray … said no-one. It’s a time of number crunching, mundane admin, and stress-driven searches for lost sales slips and checks.

To make things worse, it’s also one of the most opportune times for criminals to steal personal data and commit identity fraud. Criminals can use stolen SSN or personal tax identification numbers to fraudulently file tax returns. They profit by getting tax refunds re-routed to new addresses or bank accounts.

Luckily, there are safeguards to protect your clients against tax fraud. Insurance Business America caught up with Paige Schaffer, CEO, Global Identity Protection Services at Generali Global Assistance, who offered eight tips that insurance agents and brokers can share with their clients to mitigate their exposure to tax fraud.

1. File your taxes early

When it comes to filing taxes, the procrastination is real. The Internal Revenue Service (IRS) says that about one in five tax filers wait until the last two weeks before filing. A recent survey published by WalletHub.com says 51% of people would rather report to jury duty instead of filing taxes, and 10% would rather drink expired milk. The message is clear: people really don’t like doing their taxes and they often leave it to the last minute. This leaves them more vulnerable and it gives identity thieves optimum time to make fraudulent claims.

“It’s important to file as early as possible,” said Schaffer. “Being proactive is one of the best ways to prevent an imposter from stealing your return because you’re providing a smaller window of opportunity. The IRS processes returns on a first-come, first-served basis, so you want to make sure you get it done quickly.”

2. Find a reputable accountant or tax-filing software

It’s really important to file your taxes through a reputable accountant or tax-filing software, according to Schaffer. This helps with the prevention of errors and omissions, while also improving security and reducing exposure to fraudulent or criminal activity.

“Not all tax preparation is created equal,” Schaffer warned. “There are some junk companies out there, and there are also some pretty institutional firms. The American Bar Association cautions folks to avoid tax preparers who promise they can obtain a higher refund, as well as preparers who base their fees on the amount of the return. That should be irrelevant. It’s better to use a reputable accountant or a software tool that has a flat fee for its services and gives you access to legal resources as needed.”

3. Sign up for scam alerts from the FTC

The Federal Trade Commission (FTC) provides a free scam alert which helps people stay abreast of all the dirty tricks scammers are currently using. It provides information on tax fraud, in addition to other cybersecurity vulnerabilities that are doing the rounds.

4. Don’t provide personal information over phone or email

We’ve all had those phone calls from the “alleged” IRS saying there’s a warrant out for our arrest due to some sort of tax SSN infringement. Surprise, surprise, these calls are totally bogus … and yet, people still fall for them.

“You should never give out personally identifiable information (PII) over the phone,” Schaffer told Insurance Business. “The IRS will never contact you asking for PII via phone, email, or social media.”

5. Use encryption tools

As Schaffer stressed, it’s best not to send emails with PII attached. But sometimes, it can’t be avoided. In such instances, “make sure those emails are encrypted,” said Schaffer. “There are lots of encryption programs out there, which can protect your PII. And you can also make changes to your email security settings. It’s critically important to encrypt your PII if you’re sending it via email.”

6. Beware of online scams

In the 2018 tax season, the IRS saw an approximate 60% surge in phishing and malware incidents. This is hackers making the most of tax season by releasing a proliferation of computer scams. These can come via email as phishing scams or as pop-ups on the computer asking for personal information.

7. Use strong passwords

Cyber criminals are notoriously lazy. A strong password can be the difference between them bothering to hack your account and them leaving you well alone. Schaffer commented: “Strong passwords can protect taxpayers from identify thieves. Lots of the encryption software in use today can easily crack passwords around eight-digits or under. It’s advisable to have a password phrase that’s over 16 characters, and that extends beyond tax prep.”

8. Make the most of risk prevention technology

There are lots of companies, like Generali Global Assistance, that provide anti-phishing and anti-keylogging software, among other identify theft and fraud resolution services. This is critical for insurers, brokers and end-clients alike, according to Schaffer.

“The best way to mitigate risk is to be proactive,” she said. “For insurers and brokers, that means offering ancillary risk mitigation and resolution services, either embedded in your policies or by giving your customers the option to purchase further solutions. It’s not just about anti-phishing and anti-keylogging; it’s being able to monitor your personal information and your activity, whether that’s on the dark web or through the credit bureaus. Today, we have the ability with technology to track our PII and get an immediate alert is something’s not right. It never hurts to have those services in place and to have experts to call on to mitigate any fears people might have.”