BBB Provides Guidelines,

Warnings On Tax Refund Scams

HAMDEN — In recent years, the Better Business Bureau (BBB) has assisted consumers with hundreds of complaints regarding tax return preparations and promotions, many of which were focused on refund offers.

“As tax filing deadlines approach, BBB experience supports the prediction that scam artists will prey upon people’s trust and try to take advantage of confusion over newly enacted tax breaks, just as they do every year. Reading up, reaching out, and becoming an informed consumer this tax season can help people avoid tax schemes and make decisions to better protect their hard-earned dollars and improve their financial situation,” said Paulette Hotton, president, Connecticut Better Business Bureau.

In the “Consumer/Business Tips” section of the BBB Web site (www.bbb.org), consumers can find specific, easy to understand tax-related educational information, including articles on Avoiding Tax Reduction Schemes; General Tips on Deducting Charitable Contributions; and Finding a Reputable Tax Preparer.

“Most tax professionals are qualified, honest people,” Ms Hotton said.

To put consumers in contact with trustworthy tax services, the CT BBB encourages tax-filers to visit www.ctbbb.org and click on the “member reports button” to receive a “reliability report on the tax preparer you are planning to use,” Ms Hotton advised.

In addition to steering clear of tax preparers who sound too good to be true, the BBB advises consumers to avoid enticing tax-related promotions that may not be to their financial advantage such as: Quick-refund offers or refund anticipation loans. These loans are heavily promoted beginning in early February when consumers receive their W-2 forms.

The tax preparer advances money to the taxpayer, which is paid back when the refund check is received. In these cases, many consumers complain to the BBB that they did not understand the offer was a loan and felt deceived by the tax preparer.

While such fees vary, an average tax refund of $2,000 can carry associated fees for the tax preparation, filing and loan of $250 or more. That works out to an annual interest rate of 521 percent for a ten-day loan.

“You may get your money a bit quicker than waiting for your IRS refund check, but you incur a steep cost for that service,” Ms Hotton said. “In effect, you are paying fees and interest to borrow from yourself.”

The BBB advises those who are considering quick-refund offers to:

*Read up on this type of loan and consider your options. Be aware that if your refund is denied or less than you expected, you are still responsible for payment of the loan in full, as well as all fees. You may be able to speed receipt of your refund yourself by filing your tax return online and requesting direct deposit into your bank account. In addition to using BBB resources, consumers can visit the IRS website at www.irs.gov to learn more.

*Reach out to helpful organizations. Local public libraries and state or local government offices can provide the names of community organizations or groups that offer free or low-cost tax preparation assistance. Some credit unions and senior citizen centers also offer such assistance.

*Be an informed consumer. If you do decide to sign for a refund anticipation loan, carefully review the paperwork and all disclosures to gain a full understanding of the terms of the loan and related costs.

Email Scam Flagged

In other news, The Better Business Bureau is warning all businesses across the United States and Canada of a spoofing scam using the BBB name and a false BBB email address to entice recipients to access potentially damaging hyperlinks.

In February, a firm had its computer system hacked and that firm’s system generated thousands of counterfeit messages to businesses and consumers, purporting to be a complaint filed with the BBB. Recently, another firm was hacked and similar emails have been received by businesses across the country.

The attack has not affected the computer system of any BBB nor have any of their data been compromised. As with most other phishing attacks, the perpetrators have attempted to pose as a respected business to gain the confidence of phishing victims. The BBB is working with authorities to thwart these malicious attacks.

The most recent email has a false return address of consumer-complaints@bbb.org and a phishing hyperlink citing a BBB complaint case number, for example, “Documents For Case #BBA749BED0”.

These links actually direct access to a subdirectory of the hacked firm’s website where users are asked to download documents related to the complaint. The download is actually an executable file that is believed to be some form of a computer virus.

All recipients are advised that any email from the consumer-complaints@bbb.org address is not coming from any BBB and should be considered counterfeit. The BBB strongly encourages recipients of any such message to delete the message immediately without clicking on the “Documents For Case” links.

The phishing email return address of consumer-complaints@bbb.org does not exist and is being “spoofed.” Spoofing occurs when an email address is altered to appear as if the message originated from a legitimate source. This is a common practice for both spam email and phishing operations.

Phishing is a term coined by computer hackers, who use email to fish the Internet hoping to “hook” recipients into giving them logins, passwords, and/or other sensitive information. In all these scams, the phisher first impersonates a legitimate company.

In a typical scam, the phisher instructs recipients to click on a convenient link to receive or provide information that can then be used by phishers to access the recipient’s sensitive personal or business information. For more information about phishing and for tips to avert other scams, visit www.bbb.org.