When it comes to identity theft, consumers are like teenagers. They seem to have a sense of invincibility that, 'It won't happen to me, and if it does, I'll ride through it.' Any criminal enterprise will take advantage of that. —Neal O'Farrell, executive director of the Identity Theft Council
SALT LAKE CITY — It hurts individuals and families and it reaches its peak during tax season.
Identity theft tops the Internal Revenue Service's 2014 list of common scams taxpayers can encounter. And identity theft can lead to tax fraud, which uses a legitimate taxpayer's information to file a bogus tax return and claim a refund.
"It's certainly a growing problem here in Utah," said Scott Morrill, program manager for the Utah Attorney General's Office. "This year, I've received more calls about identity theft than I have in the past. For some reason, it seems to be escalating and getting worse."
Jason Broschinsky, a franchisee with Liberty Tax Service in Salt Lake City and an enrolled agent with the IRS, said he encounters instances of identity theft every year while preparing taxes for clients.
"We'll go to file someone's return, and we get an answer back from the IRS that this person has already filed a tax return, and they haven't," he said. "The thieves have gotten ahold of their Social Security number, name and date of birth, and the rest of what's on the tax return is made up."
Such forms of identity theft can have significant repercussions for taxpayers — a delayed refund, damaged credit and other problems that surface repeatedly years down the road.
In the past 36 months, 30 million people were victims of identity theft in the U.S., according to the Identity Theft Council, a non-profit group that works with communities and law enforcement across the country to combat the issue.
The group's executive director, Neal O'Farrell has been consulting governments and law enforcement on computer and financial security since the 1980s. In a video produced by the non-profit, O'Farrell said about 10,000 professional identity theft rings currently operate within the U.S.
Scammers are using a growing arsenal of techniques to obtain information from victims and make quick money at their expense. Some may call the victims, saying they owe money or are entitled to a larger refund. Others use phishing — unsolicited emails or fake websites that try to lure victims into giving up their Social Security number and other personal information.
Some thieves can find all they need in a mailbox.
O'Farrell quoted a thief who said, "To make matters even easier for us, you keep the mail at shoulder height so we don't even have to get out of our car. How nice of you. And when you put out mail to be collected, you put a red flag up that's like a flashing beacon that says, 'Important mail here. Please steal me.'"
Consumer apathy is what guarantees success for many thieves, O'Farrell said.
"When it comes to identity theft, consumers are like teenagers," he said. "They seem to have a sense of invincibility that, 'It won't happen to me, and if it does, I'll ride through it.' Any criminal enterprise will take advantage of that."
Charlie Roberts, spokesman for the Utah Tax Commission, says scammers often target the elderly or people who are not fluent in English.
"The elderly and those that are just learning the English language seem to be more trusting than others, and those are probably the two most vulnerable populations," he said. "It's good to reach out to family members to keep their dukes up and protect their identities."
Morrill says once scammers have a person's Social Security number, they can apply for employment, obtain loans and set up credit accounts because most companies don't check the number against the name it's assigned to.
Utah state law allows the Department of Workforce Services to check Social Security numbers against the names of those applying for work or assistance through the department. This doesn't prevent credit fraud, but it can prevent imposters from applying for work through someone else's number.
"That's where a lot of people in the state of Utah are being identified as victims of identity theft," Morrill said.
Signs of a scam
There are other signs that can identify most scamming attempts.
"Any time somebody is asking you, 'We need your Social Security number,' red flags should pop up all over because those that need your Social Security number have it, and they won't be asking for that information," Roberts said.
Broschinsky said phone calls and emails from people claiming to be IRS agents demanding immediate payment are almost never legitimate.
"When the IRS wants to communicate with a taxpayer, they send a letter," he said. "The IRS never emails anybody. They really don't make any first contact by phone either. Once you've established contact with someone at the IRS, they may call. But the first contact will always be from a letter."
Morrill says timing is what often gives thieves the advantage in committing tax fraud through identity theft.
"Typically, thieves are acting early to file a tax return in order to beat the actual consumer, so they get the return before the victim does," he said. "I think the key to prevent this is to file your taxes as soon as possible so if somebody is using your information, they can't file your return quicker than you can."
Experts agree that consumers aren't defenseless against identity thieves.
O'Farrell says online banking is the most effective way to protect and monitor financial assets. Consumers can check the status of their accounts at any time and don't have to wait for a statement to come in the mail at the end of the month.
Taxpayers can also prevent fraudulent tax returns filed in their name by applying for a personal identification number or PIN through the IRS that will be required in filing the following year's return.
One of the best ways to prevent identity theft, Morrill said, is to keep Social Security numbers protected.Comment on this story
"A big preventative method is keep your Social Security number locked up at home," he said. "Don't carry it in your wallet with your driver's license. Once that number is gone, there's no way to prevent it from being used by someone else."
If a person suspects that their identity has been compromised, they can contact the IRS at 800-908-4490, extension 245. They are also encouraged to contact local police.