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Watch Out for This New Tax Scam

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Tax season can be the most profitable time of year for savvy thieves. And just a week into filing season, the IRS has uncovered a new trick cybercriminals are using to scam you out of your money.

The IRS warns tax preparers and consumers about a new scam in which criminals are using consumers’ account details to deposit refunds. They then contact the consumer posing as debt collection agency officials, claiming that the refund was deposited in error, and have the consumer send the funds directly to them.

This scheme is only one of many that thieves will use to dupe you out of your money this tax season, the IRS warned in a statement Friday.

During tax time, the IRS receives millions of fake tax returns as a result of what the FBI refers to as Stolen Identity Refund Fraud (SIRF) crimes, resulting in billions of dollars in fraudulent refunds every year.

Let the IRS know immediately if you think you’ve been a victim of a tax scheme. But the best course of action, whether you’re a consumer or a tax professional, is to protect yourself from becoming a victim in the first place.

Although this latest development shows that with the help of technology, thieves are becoming savvier, an old trick is at the root of the majority of SIRF crimes. Someone, in this case, a tax preparer, takes the bait and clicks a malicious link in a phishing email.

The IRS is urging tax preparers to review the Security Summit’s Don’t Take the Bait campaign, which highlights numerous scams cyber thieves and fraudsters use to fool tax professionals. Tax pros should undergo a cybersecurity overhaul to better secure their clients’ valuable data. Ask your tax preparer if they are taking these steps.

Here are other scams, and ways to protect yourself from them during tax season.

Don’t take the bait

Most of us have learned not to fall for phishing scams, but they can be convincing, especially if you’re not sure how the IRS operates. Don’t open suspicious emails or click on links or attachments in emails from people you don’t know.

The IRS doesn’t contact consumers via email, social media, or text messaging channels, and would never request personal information through any of those platforms. If you think you’ve been contacted by an IRS imposter through one of these channels, immediately report the interaction.

What about those phone calls?

Scammers may alter their phone numbers to make it look like the IRS or a government agency is calling.

These callers may use fake IRS titles and badge numbers to seem official. Those trying an IRS impersonation scam might even know your name, address and other personal information. But don’t be frightened into making a costly mistake.

If you don’t owe an immediate payment, hang up. Then, report the call to the Federal Trade Commission.

If you owe taxes, or you’re not sure, hang up and call the IRS at 800-829-1040 where IRS workers can help you.

Choose a tax preparer you trust

In the same way that you wouldn’t leave your children in the hands of a babysitter you don’t know, don’t put your money and critical information about your life in the hands of someone you can’t trust.

Half of the nation’s tax returns are prepared by paid preparers, but only 40 percent are required to adhere to the IRS professional standards, according to 2015 data from the Consumer Federation of America. If data is taken from the wrong tax preparer, you could pay the price by having your identity stolen.

Do your homework when searching for someone to help you do your taxes. The IRS has an online directory to help you find a certified tax pro.

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Does Western Union Owe You Money? Company Settles FTC Lawsuit for $586M

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*Update 3/22/18: Some consumers have reported a new scam targeting people who might be owed a refund from this Western Union settlement. The FTC says “people are getting official-looking emails about the Western Union settlement. The thing to know is that you cannot apply for a refund by email. The scam emails we’ve seen ask for information about your Western Union transaction, along with your name and address.”

By now, many consumers know to automatically delete suspicious emails or social media messages requesting wire transfers from Nigerian princes or scammers posing as long-lost relatives. 

Even so, people have lost millions of dollars to fraudsters via wire transfer scams. If you’ve fallen victim to a wire transfer scam involving Western Union, you might want to pay attention to this news.  

Consumers now can file claims to recoup money lost when scammers told them to pay via Western Union’s money transfer system, as part of a $586 million federal settlement with the company that was announced this week.  

The deadline to file claims with the U.S. Department of Justice is May 31, 2018. The settlement applies to scams executed through Western Union between Jan. 1, 2004, and Jan. 19, 2017. 

“American consumers lost money while Western Union looked the other way,” Federal Trade Commission (FTC) Acting Chairman Maureen K. Ohlhausen said this week in a press release. “We’re pleased to start the process that will get that money back into consumers’ rightful hands.”  

The settlement stemmed from a January 2017 complaint against the company by the FTC, which said that lax security policies have made the popular money transfer service a way for scammers to defraud consumers.   

The case was investigated with the assistance of the Department of Justice, the Postal Inspection Service, the FBI and several local law enforcement agencies.  

“Returning forfeited funds to these victims and other victims of crime is one of the department’s highest priorities,” Acting Assistant Attorney General Kenneth A. Blanco, of the Justice Department’s Criminal Division, said in a Nov. 13 statement. 

Western Union also has agreed to implement an antifraud program and enhance its policies on federal compliance obligations.  

What kinds of scams are covered?

variety of scams may be covered by this settlement, according to the FTC, including but not limited to the following: 

  • Internet purchase scams: You paid for, but never received, things you bought online. 
  • Prize promotion scams: You were told you won a sweepstakes and would receive your winnings in exchange for payment, but you never received any prize. 
  • Family member scams: You sent money to someone who was pretending to be a relative in urgent need of money. 
  • Loan scams: You paid upfront fees for a loan, but did not get the promised funds. 
  • Online dating scams: You sent money to someone who created a fake profile on a dating or social networking site.  

How do I submit a claim?

If you’ve already reported your losses to Western Union, the FTC or a government agency, you may receive a form in the mail from Gilardi & Co., the claims administrator hired by Justice to handle refunds. This form will include a claim ID and a PIN that you’ll need when filing your claim online at www.ftc.gov/wu 

The deadline to file is May 31 ,2018.

You also can file a claim if you did not receive a form in the mail. Visit www.ftc.gov/wu and click on the link indicating that you did not receive a claim form and follow the instructions to complete your filing. 

If you sent money to a scammer via Western Union, file a claim even if you don’t have any paperwork, according to the Justice Department. You may still be eligible for a refund. 

You can file more than one claim, if you were a scam victim more than once. 

Will I definitely get my money back?

Hard to say. Each claim will be verified by the Justice Department. If your claim is verified, the amount you get will depend on how much you lost and the total number of consumers who submit valid claims.  

If verified, you’re only entitled to a refund of the actual amount you transferred through Western Union, according to the Justice Department. Other expenses, like fees or transfers sent through other companies, will not be included in your refund. 

It could take up to a year to process and verify your claim. The best way to stay in the loop is to bookmark the FTC page for the Western Union settlement or westernunionremission.com and check frequently for updates.  

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Student Debt Relief Could Be Coming to Thousands of Borrowers

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Tens of thousands of students struggling with insurmountable student loan debt are about to get a little breathing room.

The National Collegiate Student Loan Trusts, a creditor that holds billions in private student loans, reached a settlement Sept. 18 with the Consumer Financial Protection Bureau (CFPB) in which the trusts were ordered to refund at least $21.6 million toward refunds and penalty fees for affected borrowers.

As MagnifyMoney’s Kelly Clay reported in August, National Collegiate sued dozens of former students who had defaulted on their private student loans. But in court National Collegiate failed to prove they owned the loans. This happens often when loans are sold to another lender or otherwise handed to another account manager and paperwork gets lost. Ultimately, the courts dismissed the lawsuits, citing the fact that National Collegiate had no way of proving they owned the debts in the first place.

In the settlement with the CFPB, the trusts agreed to set aside $3.5 million for reimbursements to borrowers who had already made payments after being sued for loans unlawfully. If a student loan lender can’t prove it owns a debt — for example, if it lacks the proper documentation to prove ownership — it can’t legally collect on it. Likewise, if the statute of limitations has passed, the lender can continue to try to collect on the debt, but it can no longer take legal action against the borrower.

Although there are usually limited circumstances under which student loans are forgiven, this ruling may result in many borrowers eventually having their debts wiped out. The CFPB ordered National Collegiate to have each of its 800,000 loans reviewed by an independent auditor, and the trusts will not be allowed to go forward with collection actions on any loans that they can’t prove they own.

“The National Collegiate Student Loan Trusts and their debt collector sued consumers for student loans they couldn’t prove were owed and filed false and misleading affidavits in courts across the country,” CFPB Director Richard Cordray said in a statement.

What does this mean for you?

If you borrowed educational funds from a private lender who sold your debt to the National Collegiate Student Loan Trusts, and you were sued between November 2012 and April 2016, it’s possible you’re due a refund. According to The New York Times, Bank of America and JPMorgan Chase are among the private lenders who sold private student loan debt to the trusts.

StudentDebtCrisis.org, a nonprofit dedicated to higher education funding reform, tweeted: “Thousands of Americans with student debt could see their loans cut under a @CFPB agreement with Wall Street trusts.”

If you’re owed restitution, the company will reach out to you. No action is required on your part. However, if you’d like to make a formal complaint, you can contact the CFPB.

What you can do if you’ve fallen behind on your loan

It can be tough to keep up with your student loan payments. If you’re behind, it doesn’t have to be the end of the world. It takes about nine months (270 days) of nonpayment for a federal student loan to go into default.

But many private student loans default when you are only 120 days late. Sometimes missing one or two payments can send you into default.

So make sure you carefully read your loan contract to better understand what constitutes a default and to know your rights, if you happen to default on your loan.

If you default, don’t panic. While it’s your responsibility to pay what you owe, you have rights, and it is against the law for the debt collector to harass you.

The student loan creditor must provide a written “validation notice” indicating how much you owe, the name of the creditor, what rights you have if you think you don’t owe the debt, and how to obtain information about the original creditor.

You may have options for setting up a repayment plan. Familiarize yourself with the terms of your loan and contact the CFPB if you have concerns about the practices of your lender.

‘I defaulted, and I’ve been sued. Now what?’

If you default on your loan and you’ve been sued, it can be stressful, but don’t give up. You’ve not automatically lost just because the creditor has taken legal action.

Here are four steps to take if you receive a summons.

Stick to the deadlines.

If you ignore the summons or don’t show up in court, this may result in a default judgment against you.

Verify your debt.

Is the amount correct? Is the debt valid? If there’s any discrepancy between what your records show and what the credit agency is alleging, you need to document that.

One way to do that is to send your lender or debt collector a debt verification letter. This is a formal way to ask them to verify the amount, that you are the owner of the debt, and that it’s valid. If they don’t respond to the letter within 30 to 60 days, they must cease attempting to collect the debt.

Know your rights.

Unlike federal student loans, private loans are bound to a statute of limitations. Once that statute of limitations has run out, the lender can no longer take legal action. But that doesn’t mean they’ll stop trying to collect on that debt. And that’s where you should be careful. If you pay even $1 toward an old debt after the statute of limitations is up, it automatically restarts the clock, and the lender can once again take legal action. Find out what the statute of limitations is in your state.

You have a legal right to tell debt collectors to stop contacting you entirely.

If all else fails, hire an attorney.

Hopefully you won’t need one, but every situation is different. If you don’t have the money to pay your student loans, chances are you don’t have the money to pay a lawyer.

But if you find yourself in a situation where you really need someone to simplify the complexity of your case and speak to a creditor on your behalf, you may consider consulting a student loan attorney. Private loans are subject to state law, and a licensed attorney may be the best person to help you navigate those waters. The CFPB has a tool that can help you find an affordable lawyer in your state.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.