It was March of 2009, close to the time of my wedding when I received a letter stating that my IRS tax refund for my 2008 income taxes would soon be deposited into my checking account. I knew something was off because I had not even begun to think about getting my 2008 tax return prepared and filed. With the market being in the midst of a crises, the wedding, and helping everyone else get information together to file their tax returns, I had planned to extend my own. I made mention of the letter to my CPA and we agreed that it would be wise to not spend the refund, as there had to be some sort of mistake.
Turns out not spending the refund was easy as it never came…at least not to me. After much research and some considerable expense paying my CPA to assist in the matter, we learned that a fraudulent tax return had been filed using my name and social security number. The criminal had created false W2 income from a fictitious employer in California. The bank account connected to the tax return in the IRS system was certainly not my account, but the money the IRS put into that account was real.
It’s been so long now that I don’t even recall the exact amount…seems like $2,700 or so. Me, the financial advisor professional, had become the victim of identity theft. My losses were my time, effort, and money paid to the CPA, but the actually money was not stolen from me, but rather the government. An easy target that lacks the resources it needs to chase and solve smaller money related crimes.
In this week’s Weekly Market Review, Notable Number 4 details a different identity theft technique widely used by criminals last year, again using a government process to steal money and leaving a giant mess for tax paying citizens to sort out.
I share this personal experience because in this day and time, it is not if, but rather when and how you become part of a data breach or identity theft that leaves you vulnerable or a victim. If you are like me, you very much want the culprits of the crime to be caught and justice served. Likely, even if they are ever caught, you will never know which is so frustrating. So, what can you do to minimize this type of thing from happening to you or be better prepared when it does?
This ARTICLE from Experian provides a good common sense list and there are products and services you can pay for such as Lifelock. Hopefully, a paid service would prevent a hack or theft, but one of the benefits these services boast is assistance if you do become a victim. This benefit could prove very valuable, unless you have the time to sit on hold with the IRS and other large organizations all day. Finally, you might ask your property and casualty agent about adding some protection as a rider alongside your house and automobile insurance. With the rapid growth of crime in this space, insurance companies have developed products for consumers. Hopefully, just like with your fire insurance on your house, you never get any value back from the premium dollars spent, but unfortunately the chances of you becoming the victim of identity theft are much, much greater than the chances of a house fire.
As always, we hope you find this week’s Weekly Market Review both interesting and informative. Have a great week!
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Trevor N. Coe, CFP®