FINRA Investor Alert

Tools of the Fake IRS Scam: Phones and Emotions

Is that really Uncle Sam on the line?

November 06, 2015 — WASHINGTON–(BUSINESS WIRE)–The Financial Industry Regulatory Authority (FINRA) today issued a new Investor Alert—Tools of the Fraud Trade: Phones and Emotions—to warn investors not to send money or provide personal information associated with a widespread Internal Revenue Service impersonation scam that is timed to coincide with the recent deadline for anyone who filed a federal tax extension this past April.

FINRA’s Securities Helpline for Seniors–HELPS™ recently has received calls from investors who are among the more than 700,000 people who have reported getting impersonation calls since the scam first surfaced in 2013.

The scam is an example of fraudsters using a very personal resource—your phone—as a weapon to try to take your money. The caller claims to be from the IRS, sounds official, speaks aggressively and demands immediate payment of taxes on the spot. Sometimes there are threats—pay up now or face arrest or some other serious consequence.

Uncle Sam calling…

“When someone says they are from a government agency like the IRS, many of us may accept the statement as true,” said Gerri Walsh, FINRA’s Senior Vice President for Investor Education. “Psychologists and behavioral economists have a name for the tactic these IRS impersonators use. It’s called source credibility, and it’s extremely powerful.”

The alert advises ending a conversation with any unsolicited caller as quickly as possible. This severs the emotional hold the fraudster has on potential victims. In addition, the alert notes that the real IRS will not:

  • demand that you pay taxes and not allow you to question or appeal the amount that you owe;
  • require that you pay your taxes a certain way, such as with a prepaid debit card;
  • ask for credit or debit card numbers over the phone; or
  • threaten to bring in police or other agencies to arrest you for not paying.

After you hang up, if you feel the need to double check, call the IRS at 1-800-366-4484 to determine if the caller is an IRS employee with a legitimate need to contact you.

Excerpts from the official IRS website regarding tax-scams:
Psychologists and behavioral economists have a name for the tactic these IRS impersonators use. It’s called source credibility, and it’s extremely powerful

Tax Scams/Consumer Alerts / IRS Multimedia on Tax Scams

  • Videos
    Tax Scams
    Phishing-Malware
  • Podcasts
    Tax Scams
    Dirty Dozen

    Most Recent Scams

  • Tax Preparer Phishing Scam
    A bogus email asks tax professionals to update their IRS e-services portal information and Electronic Filing Identification Numbers (EFINs). The links that are provided in the bogus email to access IRS e-services appear to be a phishing scheme designed to capture your username and password. This email was not generated by the IRS e-services program. Disregard this email and do not click on the links provided.
    For more information on this scam, see IR-2015-31, IRS Warns Tax Preparers to Watch out for New Phishing Scam; Don’t Click on Strange Emails or Links Seeking Updated Information.
  • IRS-Impersonation Telephone Scam
    An aggressive and sophisticated phone scam targeting taxpayers, including recent immigrants, has been making the rounds throughout the country. Callers claim to be employees of the IRS, but are not. These con artists can sound convincing when they call. They use fake names and bogus IRS identification badge numbers. They may know a lot about their targets, and they usually alter the caller ID to make it look like the IRS is calling.
    Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting.
    Or, victims may be told they have a refund due to try to trick them into sharing private information.
    If the phone isn’t answered, the scammers often leave an “urgent” callback request.
    Note that the IRS will never: 1) call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill; 2) demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe; 3) require you to use a specific payment method for your taxes, such as a prepaid debit card; 4) ask for credit or debit card numbers over the phone; or 5) threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

FINRA

Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA’s BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2014, members of the public used this service to conduct 18.9 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999. Investors may find copies of this disciplinary action as well as other disciplinary documents in FINRA’s Disciplinary Actions Online database. Investors can also call FINRA’s Securities Helpline for Seniors at (844) 57-HELPS for assistance or to raise concerns about issues they have with their brokerage accounts and investments.

FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating all industry participants to examining securities firm, writing rules, enforcing those rules and the federal securities laws, and informing and educating the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers the largest dispute resolution forum for investors and firms. For more information, please visit www.finra.org.