Scammers are constantly finding new ways to exploit individuals, particularly through tax-related fraud and peer-to-peer (P2P) payment app scams like Zelle. Whether posing as IRS agents, using phishing techniques to steal personal data, or tricking victims into sending money through fraudulent transactions, their goal is the same, to gain access to your financial information.
Understanding these scams and taking preventive measures can help you protect your personal and financial security. Here’s what you need to know about common tax scams, Zelle fraud schemes, and steps to keep your money safe.
Key Takeaways
This article examines prevalent financial scams in the U.S.—particularly tax fraud and fraudulent Zelle transactions—and offers tips on how to protect yourself from these schemes.
- Scammers often impersonate IRS agents and launch phishing attacks during tax season, using threats to steal personal information or secure unauthorized payments.
- Fraudsters exploit the fast transaction process of Zelle by hacking accounts through phishing emails and posing as trusted contacts to request urgent payments.
- To prevent financial fraud, watch for red flags like urgency and emotional manipulation, use strong passwords, enable two-factor authentication, and report any suspicious activity immediately.
Common tax scams: IRS impersonation and fraud
During tax season, fraudsters often exploit individuals by attempting to steal personal information or secure unauthorized payments. The IRS has consistently issued warnings about these criminals using fake emails, calls, and websites to deceive taxpayers.
IRS impersonation and phishing scams
One of the most prevalent tax scams involves criminals pretending to be IRS representatives. Victims receive phone calls, emails, or text messages stating they owe taxes and must pay immediately to avoid legal consequences. Scammers use threats of arrest, deportation, or revocation of business licenses to create panic.
The IRS does not demand payments over the phone, accept gift cards or cryptocurrency, or send unexpected refund requests via email or text. If you receive a suspicious message, do not respond—contact the IRS directly at IRS.gov to verify any legitimate concerns.
Tax identity theft
Another major concern is tax identity theft, where criminals use stolen Social Security numbers to file fraudulent returns and claim refunds. Victims often discover this scam when their legitimate tax return is rejected.
To reduce tax identity theft risks, file early, use an IRS Identity Protection PIN (IP PIN), and monitor your credit and bank accounts for suspicious activity. Be cautious of fake charities and fraudulent tax preparers during tax season.
Fake charities often urge donations to non-existent causes. Always verify charities using the IRS Tax-Exempt Organization Search tool. Some tax preparers promise large refunds but steal personal information. Make sure your preparer has a valid Preparer Tax Identification Number (PTIN).
Zelle scams: How criminals exploit digital payments
Zelle, a widely used peer-to-peer payment platform, offers fast and convenient money transfers, but its instant transaction process makes it a prime target for scammers. Since payments are often irreversible, victims rarely recover lost funds.
Account takeover and phishing scams
Hackers use phishing emails and fake bank notifications to trick individuals into revealing their Zelle login credentials. Once scammers gain access, they change account passwords and transfer funds before victims realize they’ve been hacked.
To protect yourself, avoid clicking on unsolicited links, use strong, unique passwords, and enable two-factor authentication (2FA). Set up transaction alerts to monitor suspicious activity and stay vigilant against impersonation scams.
Fraudsters often pose as family, friends, or financial institutions requesting urgent payments. They may claim a relative is in trouble and needs immediate funds. Always verify the identity of anyone requesting money, even if it appears to be someone you know. If unsure, call them directly before making any payment.
Fake sellers and invoice scams
Zelle is frequently used to deceive buyers into paying for non-existent items. Victims send money for a product or service through an online marketplace, only for the seller to vanish after receiving the payment.
To avoid falling for fake seller scams, it’s important to use buyer protection services offered by platforms like PayPal rather than making direct Zelle payments. Always verify the credibility of the seller by checking reviews and past transactions to ensure they are trustworthy. Additionally, never send money to someone you haven’t interacted with in person or through a reputable marketplace.
How to protect yourself from financial scams
Preventing financial fraud requires vigilance and proactive security measures. By understanding how scammers operate, you can reduce your chances of becoming a target.
Recognize red flags: Scammers often use urgency, threats, or emotional manipulation to pressure victims into acting quickly. If a call, text, or email demands immediate payment or threatens legal action, it’s likely a scam. The IRS, banks, and legitimate businesses will never demand instant payments via Zelle, gift cards, or wire transfers.
Secure your accounts: It’s important to use strong, unique passwords for your banking and payment apps to help protect your accounts. Additionally, enabling biometric security, such as fingerprint or facial recognition, along with two-factor authentication (2FA), adds an extra layer of protection. To further safeguard your finances, make it a habit to regularly review your bank and credit card statements for any unauthorized transactions.
Report and recover from scams
If you suspect you’ve been scammed, it’s important to act quickly. For IRS scams, report fraudulent calls or phishing attempts to the Treasury Inspector General for Tax Administration (TIGTA) or use the IRS phishing email reporting service. If you’ve fallen victim to a Zelle scam, contact your bank immediately and report the fraud to the Federal Trade Commission (FTC).
In cases of identity theft, visit the FTC’s identity theft website to begin the recovery process and protect your credit. Taking prompt action can help mitigate the damage and safeguard your personal information.
By staying informed and taking preventative security measures, you can safeguard your finances against tax fraud and Zelle scams, ensuring your personal information remains protected.
