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U.S. NEWSWednesday 9 March 2016
Pre-paid card users, under scrutiny, find tax refunds frozen
KEN SWEET of her ID a number of times appeared clear. “We’re working with the year were tax or wage-re-
SARAH SELL — Green Dot said they Prepaid debit card compa- company to ensure that lated, up from 33 percent
AP Business Writers weren’t readable — and nies Green Dot, NetSpend any customer service issues in 2014 and 30 percent in
PHOENIX (AP) — Thousands she says she spent hours on and others say the prob- are resolved as quickly as 2013. The IRS says tax-re-
of people have had their the phone with customer lems are the result of tighter possible,” a spokeswoman lated identity theft is one
prepaid debit cards fro- service agents to resolve fraud protection measures. for Wal-Mart said. of its biggest challenges.
zen when they try to direct In 2015, it stopped 1.4 mil-
their tax refund to their ac- This photo shows the Internal Revenue Service headquarters building in Washington. Efforts to combat lion confirmed identity theft
counts, a result of financial an escalating tax fraud problem are keeping thousands of legitimate filers from receiving their much- returns, totaling $8.7 billion.
industry efforts to combat anticipated injection of tax return cash. Tax filers who opt to have their refund deposited directly onto For criminals, the IRS makes
an escalation in tax fraud. debit cards are finding their cards frozen. The IRS said refund fraud caused by identity theft is one of its for a quick, easy score: the
It’s keeping people from biggest challenges. In 2015, it stopped 1.4 million confirmed identity theft returns, totaling $8.7 billion. IRS processes most returns
their money, and delaying (AP Photo/J. David Ake) in less than 21 days, and
access to much-anticipat- the average refund was
ed tax refunds. People who the problem. Both Green Dot and Wal- The card companies, along $2,797 last year.
rely on prepaid debit card The Associated Press re- Mart have apologized, but with the IRS, are trying to To combat the problem,
accounts are often poorer viewed documents sent to emphasized the measures stem a tide of tax fraud by the IRS held a security sum-
Americans who don’t have Green Dot by King, includ- were there to protect their identity thieves. Criminals mit last year with states and
traditional bank accounts. ing her ID picture, and they customers. file bogus tax returns using tax-industry representa-
Shannon King had her mon- other people’s identities, tives to find ways to solve
ey frozen for two weeks. claim a refund and collect the problem together.
She had planned to use it the money. Many people As a result, efforts to fight
for car repairs and to help do not know they are a fraud have intensified this
pay for a move, both of victim until they try to file a year and banks and other
which then had to be de- legitimate return and are prepaid debit card com-
layed. “It was very frustrat- unable to. The fraudsters panies are tightening their
ing,” King said. often use prepaid debit protections.
King has a Wal-Mart Mon- cards to pull off their scams The IRS and other industry
eyCard, which is run by because the accounts can representatives would not
Green Dot. She said after be relatively anonymous. say if account delays or
her refund was deposited, For example, in 2012 a Mi- freezes were requested or
Green Dot froze the card ami man was sentenced required. But the IRS did say
and asked her to send a to five years in prison and that it is working with banks
picture of her Tennessee three additional years of and debit card issuers to
state identification card to probation for filing nearly obtain information that
verify the account. The pro- 500 fraudulent tax returns. would be helpful in detect-
cess to release the money Instead of having the re- ing and preventing fraud.
took more than two weeks, funds deposited in a bank Green Dot estimates that
she had to submit photos or mailed, he had them 9,000 customers have had
electronically deposited their accounts blocked this
to prepaid debit cards, in- season, representing 0.2
cluding Green Dot, and percent of their custom-
gift cards. When he was ar- ers. NetSpend, the second
rested, prosecutors say the largest issuer, said they
man had 11 Wal-Mart mon- also have been freezing
ey cards loaded with more accounts, but declined to
than $32,000 from fraudu- give a number impacted.
lent returns. American Express, which is-
Tax and wage-related sues a prepaid debit card
fraud was the most com- known as American Express
mon form of identity theft Serve, also said it has been
reported to the FTC in 2015. stepping up fraud protec-
It’s on the rise — about 45 tion measures.
percent of the identity theft A spokeswoman with Amer-
complaints to the FTC last ican Express said customers
can minimize the chances
of being flagged for fraud
by making sure their person-
al identification information
on the account matches
the information on their tax
forms. And Jackson Hewitt,
which uses American Ex-
press cards for its custom-
ers, requires two forms of ID
to receive a prepaid bank
product to help cut down
on fraud.
While their intentions are
good, the industry’s efforts
still are somewhat frustrat-
ing for people like King.
“I understand the reasons,
but it shouldn’t have taken
two weeks,” she said.q
