Bogus email messages conceal tax scams, but new law aims to halt another type of online fraud: Internet Scambusters #434
A new angle on tax scams emerged this season as crooks rushed to exploit the effects of an IRS delay in processing returns by firing off a malware-charged email to potential victims.
Meanwhile, many other regular tax scam tricks have re-emerged this season, while the Federal Trade Commission (FTC) has issued a warning about bogus tax resolution services.
But worry not. We have all the details, past and present, to steer you clear of tax scams, plus the lowdown, in this week's Snippets issue on consumer law changes that make online shopping a little safer.
Before we begin, you may want to spend a moment looking at this week's most popular articles from our other sites:
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Get Ready for Baby with Free Knitting Patterns: Use these free knitting patterns to welcome a new baby into your family.
Do Electronic Medical Records Put You at Risk for Identity Theft? Further your protection from identity theft by learning the many pros and cons surrounding the electronic medical records debate.
Dispelling More Myths About Omega 3 Benefits: Here are some of the most common myths about Omega 3 fatty acids -- and the truth behind them.
Now, here we go...
New Malware Threat Heads Up 2011 Tax Scams
Tax scams are in full swing at this time of year, as crooks attempt to trick victims into giving away either their refunds or personal information they can use to steal identities.
Most of these tax scams have been around for years and you can read about them in some of our earlier reports.
But, as one blogger wrote recently, people still fall for these tax fraud tricks; otherwise, the crooks wouldn't be using them!
So we do recommend you check out those previous issues and pass the links to others who might benefit from them.
A particular problem this year arises from a delay by the IRS in processing tax returns while they awaited the outcome of the lengthy political debate about extending Bush-era tax cuts.
According to PCWorld.com, which recently flagged this alert, the IRS only started accepting returns, because of this, in mid-February.
Anyone who filed their return early would have been told to expect an email saying whether their filing had been accepted.
Scammers quickly jumped on the bandwagon, firing off messages saying "Your Federal Tax Payment has been rejected."
An attachment supposedly would provide further details about the rejection. But anyone who clicked on it would actually download a virus that steals personal information.
Worryingly, according to the report, only one out of 40 types of malware detection software actually spotted and halted the infection.
If you were one of the people who clicked on this attachment, you might need to have your PC professionally checked and cleaned. And you should also check your bank account to ensure it hasn't been unlawfully accessed.
The lesson here is never to click on such attachments. In fact, it's worth knowing that the IRS never sends out emails with attachments.
More commonly, tax scam emails warn of a filing problem and ask recipients to click on a link that takes them to a bogus IRS page where they have to enter personal details.
This is becoming increasingly frequent as more and more people e-file their return and, again, await confirmation from the IRS or tax software company saying whether it's been accepted.
As usual, the action here is not to click on links inside an email but to visit the IRS.gov site.
Watch out too for website addresses that seem to have that ".gov" label, to make them seem legit. If they're followed by something else, like ".gov.com" or ".gov.org" they're phony.
Nor should you reply to any email supposedly from the IRS asking for any confidential, personal information. The IRS never requests such information by email.
Another high-profile tax scam we've seen more frequently this year involves dubious tax resolution schemes claiming they can get people who owe back taxes to the IRS off the hook.
Most of these tax relief scam firms charge a hefty upfront fee and make unrealistic claims about the sort of deal they can strike with the IRS.
In October 2010, the Federal Trade Commission (FTC) convinced a federal judge to halt the operations of one company that it claimed conned the American public out of $60 million by falsely saying it could reduce the debts victims owed to the IRS.
The fact is that although the IRS does operate a limited settlement scheme, called an Offer in Compromise, very few people qualify for it. On the other hand, it is possible to arrange installment payments for back taxes.
For more information, contact the IRS, or read this useful guide on tax relief scams from the FTC.
An End to Negative Option Marketing Fraud?
It sounds like some sort of obscure financial thingamajig, but a negative option is something much more common and threatening.
Remember those record and book clubs that used to hook us with free offers followed by a torrent of products we had to pay for unless we stopped them? That's a negative option.
When you signed up, you OK'd a statement in the blurb that said something like "I need do nothing." That put the onus on you to cancel -- and, of course, most people don't.
The modern-day counterparts of these negative option deals, though, are much more sneaky and sinister, often hiding in the fine print that accompanies free trial or gift offers.
People don't realize that by signing up and giving their credit card details supposedly to pay for shipping, they're also committing to paying for something else -- and it's usually a recurring, monthly charge.
And if they fail to check their credit card statements, victims often don't realize, sometimes for months, that they're paying.
In other words, companies were allowed to interpret consumers' silence or failure to cancel as acceptance of their "offer."
The good news is that, as of this year, a new law could help put an end to negative option deals, or at least the most distasteful types.
The legislation, called the Restore Online Shoppers Confidence Act (whew! what a mouthful), among other things, stops firms from hiding behind the fine print, and prevents Internet retailers from automatically transferring your credit card details to marketing firms who "piggy-back" on their websites.
You've probably seen this sort of thing: You complete an online purchase only to be greeted by an offer that says something like "Get $10 off your next purchase."
But it's not the retailer you bought from that's offering the 10 bucks, but a third party marketing company.
Sometimes, this type of promotion just leads you through a series of other product advertisements but often you have to sign up to get your money-off voucher, not realizing the original retailer has passed your card details to the promoter.
How they behave after that depends on how reputable or honorable the promoter is. And, well, need we say more?
Now, retailers can't pass on that information without your permission, and promoters have to be upfront about what you're signing up for. They have to explicitly get your permission to charge your card.
The Federal Trade Commission (FTC), which champions consumer rights, was a key mover in getting the new Act introduced. It was signed into law by the President at the end of 2010.
FTC Chairman Jon Leibowitz said: "Too many companies are trying to use phony monthly billing to rip off Americans and this bill will help strengthen our hand.
"Consumers should be able to make informed decisions, so the terms and conditions of any offer must be disclosed clearly and conspicuously."
Amen to that.
If you'd like to know more about this law, see S. 3386: Restore Online Shoppers' Confidence.
And if you want to know more about tax scams, please read those earlier articles, follow our guidance -- and stick with Scambusters!
That's it for today -- we hope you enjoy your week!