The new tax refund scam

A new phishing scam is taking advantage of stretched budgets.

This article is now out of date. To read a current version, please go to Beware this tax scam

There are few more satisfying feelings than when you receive a tax rebate. Nobody punches the air with delight when they see how much of their earnings are making their way to HM Revenue & Customs when they check their pay slip, so it’s always lovely to get some of that cash back.

And with money tight for all of us across the UK, the idea of claiming some of that tax back becomes even more enticing. Just think how much an extra couple of hundred quid would help the bank balance!

Inevitably, scammers are cashing in on that fantasy.

Gone phishing

According to Equifax, this year has seen a spate of new phishing emails targeting taxpayers, with the promise of potentially lucrative tax refunds.

The emails promise recipients that they are due a tax refund, having paid too much to the taxman previously. And all you need to do in order to get your hands on the money is to send off your bank or credit card details...

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Now phishing emails, particularly regarding tax refunds, are not necessarily a new thing. However, according to Equifax, it’s the fact that these emails are becoming ever more sophisticated and convincing is a new development, and one which should have us all on our toes. One of the firm's own directors admitted he had been targeted by a particularly convincing email recently.

What they’re after

Once fraudsters get their hands on your details, there are all sorts of things they can do with them. If they get your account details, then obviously it becomes fairly easy for them to make off with your hard-earned cash.

And if they get hold of your personal details, they can take out credit in your name (leaving you saddled with thousands of pounds of debt), apply for benefits, new passports and driving licences. For many victims, you only find out what has happened when it’s too late.

It’s not just phishing

According to CIFAS, the UK’s fraud prevention service, ID fraud is a serious problem, with 89,000 victims identified in 2010 alone.

And it’s not just these emails, no matter how sophisticated, that allow fraudsters to get their hands on your details and steal your identity. There are all sorts of different techniques, which encompass everything from fake charities to stealing the identity of the deceased. Be sure to have a read of The five worst ID fraud scams for more.

Repairing the damage

Should you be caught out by an ID thief, it can be a very stressful experience. And it can take a while to repair the damage.

If you think you’ve had your identity stolen, be sure to report it immediately to the relevant authorities. Fraud experts Action Fraud reckons you should then get a copy of your credit record (you can sign up for a week’s free trial with Credit Expert via lovemoney.com). That way you can check which financial organisations have accessed your file.

If there are any suspicious entries, then contact the credit agency you use and inform them.

The agency will then contact lenders where fraudulent applications have been made, and work to restore your credit record to its former state. You will be kept up-to-date on any developments or amendments to your credit record.

The agency will also provide advice on how to further protect yourself in future.

You might also like to consider CIFAS Protective Registration at this point. It's a service which affords you some protection if you believe your identity is at risk, as potential fraudsters have your details. An extra warning is placed on your credit record, so when a firm performs a check on you after you've applied for credit, they will have to undertake additional verification checks before approving the credit.

It's a simple way of ensuring that you and only you are able to take out credit in your name in the future, and for £12+VAT a year, it strikes me as a decent price to pay for peace of mind. 

Staying safe online

There are some very simple steps that you can take to ensure that you protect yourself (and your finances) online.

Here’s what you should be doing:

• Legitimate firms are unlikely to ask you to give out your personal details online. If in doubt, contact the company directly to ensure they were behind the email you received.
• Keep your anti-virus software up to date to protect against the latest Trojans and other viruses.
• Don’t use the same password for all of your various online accounts.
• Don’t use common verification facts, such as date of birth or mother’s maiden name.
• When online banking, always be sure to log out when you’ve finished.
• Monitor your bank accounts regularly so that you pick up on any unusual activity quickly.
• Check your credit record regularly. You can get a free week’s trial with Credit Expert via lovemoney.com.
• Set your browser to the highest security setting.
• Never open an email attachment from someone you don’t know. Even if it comes from someone you do know, don’t open it without checking they did intend to send it to you.
• If carrying out transactions online, be sure to check the URL begins https, or that there is a padlock.

*Thanks to Equifax for some of these tips

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