Urgent: Taxpayers and Banks Now at Risk of Child Tax Credit Scams
Starting this July, taxpayers eligible for child tax credits will begin receiving payments from the IRS. Payments have increased from $2,000 to $3,000 per child, ($3,600 for children 5 years old and younger) for the 2021 tax year.
Taxpayers who have filed their 2020 tax returns, and are eligible for the credit, will have virtually nothing further to do before payments are sent. However, those who have not filed for 2020 or 2019 must act in order to receive the credits.
This leaves an enormous number of taxpayers (especially those who have not filed for 2020 or 2019) at risk of fraud.
Fraudsters are aware of the IRS plans to send payments and have the tools to steal personal taxpayer information and change banking details, funneling those child tax credit payments into illicit accounts. Even childless taxpayers are at risk.
Financial fraudsters are creating synthetic identities for children, both real and non-existent, and will undoubtedly file tax returns under the names of childless individuals and couples to steal the credit funds. With knowledge of the IRS payments system, they file and set up bank accounts under the guise of a real taxpayer to collect fraudulent payments.
Even the IRS has noted the possibilities of fraud. On the IRS website, they say:
The IRS urges everyone to be on the lookout for scam artists trying to use advance Child Tax Credit payments as a cover for schemes to steal personal information and money. The IRS doesn’t initiate contact by email, text messages, or social media channels to request personal or financial information – even information related to advance Child Tax Credit payments. Also, watch out for emails with attachments or links claiming to have special information about advance Child Tax Credit payments or refunds of the Child Tax Credit.
But every taxpayer is at risk.
Even taxpayers who have bank information stored with the IRS could be scammed. The IRS offers taxpayers (and scammers) the ability to enter their portal and change banking information. While the IRS intent is benign (to help real taxpayers receive payments to the right account, and timely), scammers can change legitimate payment details, transferring money to their own accounts.
This is why it’s more important for banking institutions and credit unions to have anti-fraud measures in place, as taxpayers (bank customers) may not even know frauds are occurring in their names.
Because of the child tax credit payments, massive frauds will occur, potentially in the billions’-of-dollars. But individual taxpayers will not be the only victims. Financial institutions of all sizes are threatened as well and may be on the hook as illicit payments enter and exit their systems.
While the individual does have some control over the payments process, it’s up to the financial institutions to detect and prevent these frauds. However, most current fraud measures are obsolete and will catch only a fraction of these frauds before funds are transferred from the IRS to an illicit account, then out.
High level transactional Ai (artificial intelligence) tools that operate in real-time may be the only solution. The capabilities of these tools range from detection and prevention of fraud to prediction of where and when new threats may occur. Since it operates in real-time, anomalous bank accounts can be detected as they’re opened and anomalous transaction requests can be denied live, preventing fraudsters from ever receiving or transferring illicit funds.
ToolCASE, the world’s most advances transactional Ai company creates customized Ai and Machine Learning tools that can detect, prevent and predict fraud. They’re a global leader and preferred solution for the retail banking industry.
For over two decades, ToolCASE has specialized in fraud detection, Data Integration, Artificial Intelligence and Real-Time Analytics. ToolCASE has processed over 60 billion transactions helping to avert over $150,000,000 in losses for banks and credit unions of all sizes.
With the IRS just about to begin sending billions in payments, banks and other financial institutions must protect themselves, and their legitimate customers from fraud. ToolCASE is the solution.
Learn more about how ToolCASE can save your institution millions in fraud losses and protect your customers HERE.
Or read more about the 2021 Child Tax Credit and Advance Child Tax Credit Payments, HERE.