A surge in stolen tax refunds helped solidify identity theft as
the complaint most often registered with the Federal Trade
Commission in 2012, according to figures released Tuesday.
For the 13th straight year, the
that consumers complained most often about identity theft, even
more than other categories that involved, say, aggressive debt
collectors and shady car dealers.
Tax thievery more sophisticated
The numbers, however, show how identity theft has become more
sophisticated over the years: No longer content to merely steal
credit card numbers and place fraudulent orders, identity thieves
are now more likely than ever to steal a Social Security number,
file a fake tax return under a false name and reap the tax
The 12,137 tax-related identity theft cases reported to the FTC
in 2012 accounted for 43 percent of all identity theft complaints.
In contrast, credit card fraud accounted for just 14 percent. Two
years ago, tax-related identity theft accounted for just 16 percent
of identity theft complaints.
"A spike of this magnitude suggests an increased prevalence,
which may be attributed to a variety of factors, such as organized
crime and tax ID theft rings," says Lisa Schifferle, an attorney
with the FTC's division of privacy and identity protection. "Gangs
are shifting from drugs to identity theft."
Tax-related identity theft is also made easier by the move
toward electronic tax filing, which does not require the attachment
of printed W-2 forms. The increase is also augmented by people
using false Social Security Numbers to verify employment
eligibility, she said.
On its website, the Internal Revenue Service
lists three dozen recent examples
of people convicted of tax identity theft crimes. In one typical
case, a man from Opa-locka, Fla., was sentenced to four years in
prison in January 2013 after using students' identifying
information from a stack of scholarship applications at Florida
A&M University to file false tax returns, then having two
accomplices that worked as bank tellers cash the checks. He also
had to pay nearly $300,000 in restitution.
Florida leads in ID theft
Many cases originate from Florida, which again led the nation in
the number of complaints about identity theft and fraud. Of the 10
metropolitan areas with the highest rates of identity theft
complaints, Florida had nine, led by Miami, Naples and Tampa.
Officials say Florida might be at the top because of its high
elderly population, which is more vulnerable to having identities
stolen in nursing homes and long-term care settings. FTC complaints
from seniors were also up from previous years, Schifferle says.
In another scheme, in Boston, a tax preparer was sentenced to
more than five years in prison after admitting to preparing
duplicate returns for her clients: One version would go to the
clients, but she would file a second version with the IRS that
claimed a larger refund. She then pocketed the difference. The
court ordered her to pay $400,000 in restitution.
Avoiding tax rip-offs
To avoid becoming a
, experts recommend filing your return early, filing it on a secure
Internet connection if filing electronically, and not leaving your
completed return in your mailbox.
Overall, the FTC received more than 2 million complaints in
2012, its highest figure ever and a nearly 9 percent increase over
the previous year. However, year-to-year comparisons are imprecise
because FTC database, called the Consumer Sentinel Network,
collected information from more sources in 2012 than in 2011. For
instance, the new Consumer Financial Protection Bureau contributed
80,000 more reports in 2012, its first full year of reporting. A
smartphone application called PrivacyStar, which allows users to
easily report do-not-call and debt collection violations, reported
about 125,000 additional complaints.
the numbers show interesting trends
. Complaints about identity theft, debt collection, online
merchants, banks and auto sales and repairs rose, while gripes
about health care, Internet auctions and credit bureaus fell.
Complaints about credit cards rose 36 percent, to 51,550 -- the
first rise in that category in three years, according to the FTC
tally. The category covers "account or billing issues, including
interest rate changes, late fees, credit disputes and overcharges,"
and fraudulent card offers. Complaints had been declining in
previous years, which experts attributed to clearer and more
stringent rules springing from the
Credit CARD Act of 2009
And one popular scam from prior years seems to be dying out, or
is at least complained about less: Complaints in the category
"Nigerian/Other Foreign Money Offers" fell by half in two years, to
just 7,800 in 2012.
Tax ID theft skyrockets; thieves feast on refund