Tag Archives: Northwest Indiana

Scams Hit Northwest Indiana

Scam artists and less-than-honest businesses seem to be running wild in Northwest Indiana lately. Within one week, three different articles appeared in the NWI Times:

  1. AG Zoeller files lawsuits against local businesses
  2. National rental scam reaches NWI
  3. C.P. police warn of telephone scam; two residents victims

We’ve got a full line of scams and rip-offs here: car dealerships rolling back odometers, shady mortgage schemes, the grandchild-in-trouble telephone scam and a few Craigslist rental property scams.

The articles above do a fine job of presenting the details of each situation; no need to rehash here. The real lesson is this: always be aware of potential scams, watch out for anyone promising to lower your mortgage payment, never take an online classified ad at face value, never wire money to anyone who contacted you first, and always get a Carfax report before you buy a used auto.

The bad guys are out there, and they have a variety of methods at their disposal. All the rest of us can do is be informed, ask questions and stay vigilant. But those simple tools go a long way towards keeping yourself away from scams and fraud.

How to avoid tax season scams

This is an expanded version of a post I wrote last year. It’s a hot topic every winter/spring, so I thought it might be a good time to revisit.

* * *

I’m going to amend an old saying right now: in this world nothing can be said to be certain, except death, taxes and tax season scams.

It happens every single year now, from January through April: tax-related scams absolutely run riot, from emails and phone calls to shady tax preparers and rogue employees.

There are some easy ways to keep yourself safe, though.

The IRS Will Not Email You

There is no scenario in which the IRS is going to send you an email. Even if you used online tax software to e-file your return, they are never going to contact you in this way if there’s a problem with your filing. They will contact you via telephone or, in most cases, use postal mail.

This is a vitally important point to remember. Do you know what the #1 email scam was in 2009? It was phishing emails designed to look like they came from the IRS. If you get one, forward it to phishing@irs.gov and help them fight these scams, and never open attachments in an unexpected email unless you want to be infected with spyware or to allow a criminal to access and control your computer.

The IRS Will Not Ask You to Verify Information

Even if there is a problem with your return, or you’ve been selected for an audit, the IRS is not going to ask you to “verify” your personal information. This goes for any mode of communication, electronic or otherwise.

Here’s the deal: they’re the IRS. They don’t need to ask you for your personal information. They already know who you are, when you were born and what your Social Security Number is.

Don’t Trust Caller ID

I’ve never even heard of anyone getting a phone call from the IRS, but my sources say it does happen. However, the time when you could implicitly trust caller ID is long gone. It’s easy to spoof a caller ID display using Voice Over Internet Protocol (VoIP).

If the caller ID says Internal Revenue Service, but they’re asking you to verify your personal information, bank account or credit card numbers, you’re dealing with a scam. Hang up immediately.

The IRS Keeps Pretty Normal Business Hours

In addition to being wary of caller ID, also know that the IRS isn’t going to call you on the telephone in the middle of the night.

This same rule goes for callers that claim to represent your banking institution. How many times have you seen a bank open at 3 AM? Not often. Phone calls at strange times are a sure sign of a scam.

Know Your Tax Preparer

If you’re paying someone else to prepare your tax return, only deal with people or businesses you know and trust. If it’s a friend or relative, make sure they know what they’re doing. It doesn’t matter who prepared your return—you are ultimately responsible for the filing.

Personally, I think it’s best to have a person you always go to. A couple years ago there was a case in Northwest Indiana where dozens of people had their identities stolen by some rogue employees of a national tax preparation company. If you’re not doing your own taxes at home, I recommend using a CPA you know personally (or can get to know over time).

Be Wary of Big Promises

When you’re shopping for a tax prep person or agency, be cautious of anyone making wild claims about the money they can get for you. Remember: you’re the one whose name and signature go on that tax return. If they put some giant fabrication on that form, and you sign it, that means you agreed it was accurate. You’ll be the one in trouble when you’re found out.

Alleged national fraud ring busted: let’s do the math!

This item appeared in today’s edition of the NWI Times.

If you don’t want to read the whole thing, here’s a summary: four people from Indianapolis were arrested for allegedly running a fraud ring in which involved adding themselves to other people’s financial accounts. Four others (two from Northwest Indiana) are also named in the case.

They are alleged to have taken around $200,000 over the course of three years. The first thing I thought when I saw that number was, “Isn’t that an awfully small amount?”

Assuming the facts are as stated in the article, and that all eight people are guilty (which has not been proven yet, I know—this is a purely educational discussion), let’s do the math:

$200,000 divided by eight people equals $25,000 for each person. That, divided by the three years, equals $8,333.33 each per year.

That’s not exactly a major haul, is it?

Think about it:

$8,333.33 divided by 52 weeks per year equals $160.26 per week. Divide that by the current minimum wage of $7.25 per hour, and these people would have had to work just over 22 hours per week at minimum wage to match their income from this fraud scheme.

In other words, they could have worked a drive-through window for less than 4½ hours a day (assuming a five-day week) and come out ahead, with the added advantage of not having to serve jail time for doing it.

I wonder how hard they worked to create and maintain this scheme. I’ll bet it involved a lot more sweat than handing sacks of burgers to people in cars would have, though.

Again, we have a justice system in this country, so these people could all be completely innocent. I just thought the math was kind of interesting.

The Fraud Prevention Unit in print

It’s official: I’m making the leap from blogging to print media. The Chronicle, a weekly newspaper serving Portage, Valparaiso, Chesterton and Hobart, has picked me up for a monthly column on the topic of fraud prevention.

The column will run on the fourth Wednesday of each month, and will feature the same kinds of material I cover here, albeit in a more formal style (alas, the print medium comes with a word limit and established stylistic traditions…no room for the usual tangents and obscure references).

The first one goes out tomorrow (July 28, 2010). Be sure to check it out.