IRS Security Breach: What You Need to Know


The recent IRS security breach it shouldn’t come as a surprise. After all, the IRS has paid out $5.8 Billion in fraudulent refunds from 2011 through 2014. Yes, you read that correctly, Billion with a “B.”

So how could this happen? You would think the government of all organizations would have enough security to keep our personal information private. Unfortunately that isn’t the case. Hackers used the IRS’s own website in attempt to steal taxpayer information for around 200,000 households, about 100,000 of which were actually affected. The thieves used stolen data to get past verification questions on the IRS website, giving them access to old tax transcripts. They then filed for fraudulent refunds.

If You Were Affected, You Will be Notified

The IRS will be sending out mail to all 200,000 accounts. If your account was affected, you will know. The IRS WILL NOT be asking for any personal information from you. If you receive any letter, email, phone call, or anything asking for your personal information, it is most likely from a con artist. Conmen strive on these types of situations, so don’t divulge any of your personal information to anyone! If you do believe you had fallen victim to this breach, or any other form of identity theft, read on below.

Ways to Protect Your Identity:

Credit Monitoring

While the IRS is offering free credit monitoring to all who may have been affected, there is a good chance your identity has already been stolen. If you have fallen victim to any sort of identity theft, credit monitoring is a necessity.

Credit monitoring will notify you if someone attempts to open an account in your name. This way you can contact the accounts and immediately clear things up. The quicker you act on fraudulent activity, the better chance you have to bounce back from it.

(If you are interested in credit monitoring, Better Qualified is offering 3 months free through SmartCredit. Just click here.)

Security Freeze

One of the best ways to protect your credit is to call the bureaus and ask to have a security freeze put on the report. The security freeze will halt your account from being pulled when applying for credit, making it harder for thieves to open lines of credit in your name.

Security freezes cost anywhere from $0-$10 depending which state you live in. Most states will offer free security freezes for those who fell victim to ID theft.

I know what you’re thinking, “How will I be able to access my own report if I have a security freeze on it?” If you need to pull your report for an application or service, all you would need to do is call up the bureaus and get the freeze temporarily lifted or give access to certain businesses that will allow your credit to be pulled.

Fraud Alert

If you don’t want to put a security freeze on your report, you may place a fraud alert on your credit report. Fraud alerts are similar to security freezes. Fraud alerts are free and will give you a free credit report. Fraud alerts will remain on your report for 90 days (you can always renew it once the 90s days is up.) When you have a fraud alert on your report, a business must verify your ID before issuing credit. This will force the business to contact you and make it harder for the thief to open a new account.

To place a fraud alert on your report, just simply call one of the 3 credit bureaus and tell them you wish to do so. By law, they must contact the other 2 bureaus and let them know you have placed a fraud alert on your account. Although the fraud alert is free, you will have to provide proof of your identity.

Don’t Assume Your Credit Report is Fine

When was the last time you checked your credit? Do you currently have a credit monitoring service? One out of four Americans have incorrect information and accounts on their report. Hire an IRS audit accountant to make sure your account is reporting correctly.

Credit reports can be hard to read. If you don’t know what you’re looking at, have a credit expert look for red flags in your report. The consultation is free. Just fill out the form below.


Kansas City Woman Awarded $82 Million In Debt Collection Case

Maria Guadalupe Mejia

A Jackson County jury ordered collection company Portfolio Recovery Associates LLC to pay $82 million dollars to KC resident Maria Guadalupe Mejia. Mejia had this debt mistakenly attached to her by Portfolio Recovery. The actual debt holder was a man with a very similar name.

Portfolio Recovery had failed to hand over documents requested by the judge regarding information in the case.

Portfolio Recovery Associates LLC is one of the largest debt buyers in the USA. “This company has gained a reputation for take no prisoners, ‘If you mess with us we’re going to take you all the way, you’re going to have to spend a lot of money on this litigation, you’re going to have to go all the way to trial,'” said Gina Chiala, one of Mejia’s attorneys according to KCUR. ““And so, among consumer lawyers, they are known to be very aggressive in litigation and to not stop; even when they’re wrong, they’re just not going to stop.” If you need to contact good lawyers, call the Noonan Law firm.

The jury determined damages and Mejia was awarded $251,000 and $82,990,000 in punitive damages for malicious prosecution.

Portfolio spokesman Michael McKeon said “We hope and expect the judge will set aside this inappropriate award, and we plan to file motions to make the request formally in the very near term. Any fair reading of the facts of this case makes plain that a verdict of this size is not justice by any means and cannot stand.”

“I am so thankful to the jury for giving me and my family justice. This should not happen to anyone, and I hope the jury’s verdict will stop Portfolio from doing this to others.” Said Mejia

According to  Credit Karma study, 1-in-4 or 25% of Americans have credit reporting errors. Mejia was just one of the many victims.


Get a Free Credit Consultation from a Credit Expert

Don’t assume your credit report is fine. If you are worried that you may have incorrect information reporting on your credit report, have one of Better Qualified’s credit expects take a look and go over your report with you.


6 Steps to Handle Identity Theft


You’ve seen numerous web pages and blogs about what you can do to prevent your Identity from being stolen, but what are the steps you can take if you are already a victim of identity theft? Approximately 15 million US residents have their identities stolen each year. Stats like this make identity theft the fastest growing crime in the country. Although there may be an infinite number of steps you can take to prevent it, sometimes identity theft is inevitable. So what do you do if you are a victim of identity theft?

1. Monitor Everything

From now on, make sure you monitor and document all contact that is made between yourself and your financial institutions. Every phone call needs to be recorded or written down and documented. Every email, saved and archived. Every letter or document you receive in the mail must be put away and kept in a safe place. This way you can keep track of all of your accounts, who you talked with, and when.

2. Fraud Alert

Immediately after you realize you have been a victim of identity theft contact fraud lawyers Melbourne and call one of the credit bureaus (numbers listed below.) Explain the situation to them. Tell them your identity has been stolen and you wish to put a fraud alert on your account. Confirm with them that they will contact the other 2 bureaus as well.

With the fraud alert, you will receive a free credit report. The alert will remain on your account for 90 days (or more if you wish to extend it.) Now every time credit is applied for in your name, the report will come back with a fraud alert. The applicant will be asked security questions and/or to provide proof of identity in order to become approved.

Equifax: 1-800-525-6285

Experian: 1-888-397-3742

TransUnion: 1-800-680-7289


3. Contact Your Accounts

Contact all of your financial accounts and let them know you had fallen victim to identity theft. Tell them you had already placed a fraud alert with the credit bureaus. Make sure your accounts are all where they need to be. If some money is missing or something seems off in one of your accounts, make sure you notify them as soon as possible.

Change all of your passwords and pins. Try not to use the same password for every account. This can make it really easy for your identity thief to log into all of your accounts. If need be, close old accounts and open new ones.

4. Call the Federal Trade Commission

The FTC processes complaints by consumers who have fallen victim to identity theft. The FTC will provide you with the necessary steps you need to take in order to resolve your identity theft issue. You may also fill out the FTC’s online form.

After completing your call or online form, you will be given a report called an Identity Theft Affidavit. Take this report to the police station for our next step.

5. File a Police Report

With your Identity Theft Affidavit in hand, go to your local police station and file a police report. It is very important to always file a police report if you believe your identity has been stolen. Although the chances are extremely slim to none that the police will catch the responsible party, the police report can help you in the future when dealing with creditors or financial institutions. After you file your police report, make sure you make a copy for yourself.

6. Get Credit monitoring

If you don’t have credit monitoring by now, get it! Credit monitoring is the best way to stay on top of your accounts and help prevent ID theft from happening. Just because you make have had your identity stolen once before only makes you more liable to have it stolen again. Make sure you are on top of your accounts.

Luckily for you, Better Qualified is giving away 3 months of credit monitoring for free! Our credit monitoring service includes a free credit report and free money manager. Just click the link here!


New Years Resolution: Get Out of Credit Card Debt


It’s a new year and that means everyone is off to an inspiring start on their new years resolutions. You may already have your plan in effect to lose weight, get fit, and aim for that new promotion, but what are you doing about the pile of debt you racked up over the holidays? It’s well worth noting that only 8% of the population will be successful in their new years resolutions (according to the trivia flip calendar on my desk.)

While you pay the minimum balance on your credit card accounts, that debt is going to continue accruing interest and take you years to pay off. Wouldn’t it be nice if you started to take control of it today before it controls you? (And if it already does, I can help.) Here are a few tips to live by to get your mountain of debt in order.

Find out what is on your credit report

You would be surprised at the amount of people who have not a clue as to what is reporting on their credit report. Most people aren’t even sure how much debt they are actually in. They may say its one number when it’s actually much more. Your first step towards paying off your debt is to find out how much of it you have. You’re going to need to get a credit report. You can obtain one by visiting They will give you one free FICO credit report every calendar year. You may also go with free online sites like Credit Karma or Credit Sesame. However, the free online sites only pull from one bureau and their scores are not FICO. (For more on FICO vs FAKO, read our past blog here.)

Once you get your credit report make note of all of your debt. Write it down and add it up so that you know just exactly how much debt you are in. For some of you this may be devastating, but don’t worry, look at it more like a goal to obtain and keep you mind focused on the end result.

Make a budget

Now that you can see how much debt you are in and how many bills you have to pay, it’s time to make a budget. Study your past bills and bank statements and write down all your necessary living expenses. This includes: Rent or mortgage, utility and credit card bills, car payments, ect. Make sure you’re paying everything on your credit report on time so that your accounts don’t fall into the negative.

Be realistic with yourself and cut out any unneeded expenses. Goodbyes are never easy, you may have to start making some sacrifices. Cook meals at home and bring lunch to work instead or dining or ordering out. It may be a good time to cut Netflix, HBO, or any of those other premium channels out of your life (you’ve already watched everything good on there anyway.) Once you get rid of all your unused subscriptions and services, you may find yourself with much more money than expected. Those $8/month subscriptions really add up when you have  a bunch of them.

Try for better rates

Most of the population today takes whatever is given to them without asking any questions. I’ve found that you can actually go far and get more out of life by simply calling and asking for it. If you get denied, you’re in the same position you were in before. Some of your credit cards may be impossible to pay off simply because their rates are too damn high! If you can get a better rate on the card, then why pay more money if you don’t have to? Try calling up each of your credit card accounts and asking them to lower your rates. Just make sure you prep yourself and do your research. You may want to find out what the prime rates are for that card. If you’re unsure of how to ask, try doing what Sally from did here

Apply for 0% balance transfer cards.

As stated before, the interest rates may be too close to the minimum payment on your card. This will take forever to pay the account off if only making minimum payments. Most large credit card companies will offer 0% balance transfer cards, interest rates worst enemy. 0% balance transfer cards are the secret play in your playbook to get out of credit card debt. These cards will allow you to transfer your balance to a new card with 0% interest for a period of time. Making it perfect people who are trying to pay off debt! Your balance will drop surprisingly faster if you are not paying interest. Transfer your debt to a 0% balance transfer card and make it your goal to pay off the balance before the interest rate kicks in.

It is vital to note you should NOT CHARGE THE CARD as you will only make your debt situation worse. These cards should only be used to pay off the debt, not add to it. You will need to get approved for the card as they may only issue them to people with good credit. Shop around, and choose the right card for you.

Pay off the large accounts first

So now you’re ready to start paying off your accounts, but which ones do I take care of first? The best method would be to flood your extra cash into the largest accounts with the highest interest rates, while making minimum payments on all others. This will ensure that you are paying less in the long run. The higher the interest rates, the more money you will have to spend paying off the account. Once you finish with your biggest baddest account, flood your extra cash into the next biggest baddest account until that one is paid off. Continue this process and you’ll be out of debt much sooner than you think.

Some people may suggest the opposite. Take care of the smaller accounts and work your way up to the big ones. While this is still not a bad idea, in the long run you will be paying more due to the accruing interest on the big accounts.

Don’t use your credit cards

The whole point of this process is to pay off your debt. If you continue to use your cards while attempting to get out of debt you’re going to get nowhere. Do not close your credit card accounts as doing so will drop your credit score. Start paying for items in cash rather than credit. You’ll find cash is a much cheaper and safer means of currency.

Don’t apply for new lines of credit

This one should be a no-brainer. Applying for any new lines of credit such as new credit cards or loans will only hurt your process towards a debt free life. New lines of credit means new debt and a new bill for you. Hold off on applying for any new credit until your debt is gone.

If you start utilizing these methods, you’ll find getting out of debt isn’t as hard as you may have thought. It can be a timely process but the end result is very rewarding. Living a debt free life will take a heavy burden off your back and will result in a happier less stressed you! Once you are out of debt, remember to always pay your bills on time, and don’t rack up your credit cards as you once did before.

What Black Friday Means for your Credit


In just a few weeks we’ll all be bombarded with pre-Black Friday ads and promotions as we flip through the channels or tune into your favorite radio station. But before you put together your list and get ready to face the shopping anarchy on November 27th, there are some shopping precautions you may want to take.

In this week’s credit blog, we’re going to look at the facts, the deals, and the safest shopping methods for your 2015 Black Friday.

The Facts

First, let’s get some of the Black Friday facts straight. In 2013 $12.9 Billion dollars was spent on retail sales on Black Friday. $1.964 Billion was spent on online retail. In 2012, $59 billion dollars was spent on Black Friday weekend (Thurs-Sun). That averages out to about $423 per individual shopper. The average holiday shopper will spend around $804 for the entire holiday season. According to these statistics, more than half of holiday shopping is done on Black Friday.

The “Deals”

Are those “Outrageous Doorbusters” really THAT outrageous? On Black Friday you will see doorbuster sales in every store you go. You may even camp out in line to secure your item. Just remember retailers aren’t here to give you a deal. Retailers are here to make money and turn a profit. Once you’re in the store and you get that doorbuster, prepare to be pounded with a plethora of add on items that seem to fit so well with you “deal”. Once you walk out of the store chances are you’ve spent more than you’ve planned and bought things you didn’t need.

Opening Store Cards

You’ve stood in line for an hour waiting to get into the store. You’ve shopped for an hour, and now you’ve been standing in line for another hour waiting to check out. Suddenly a new lane opens up and the cashier says “Anyone opening up a new store card can come to this line.” Sounds tempting doesn’t it? They may even offer you another 20% off on your purchase on top of the line cut.

While you time and possibly money will be saved, your credit score will take a hit. Taking on new debt and a new inquiry will cause your credit score to drop. On top of that, most consumers will pay off the debt in increments. This will cause you to pay interest on the purchase. Now that great deal you just got doesn’t happen to be a deal at all and you may wind up paying even more than you thought.

No Payments Until 1 Year

Retailers will try to get you to buy large purchases with the promise of delayed payments. “Buy now and you won’t pay until next year!” What they won’t tell you is once your payments begin, you’ll still have to pay interest for that entire year you weren’t paying. Suddenly, this doesn’t sound too great. If you do fall victim to this scheme, make sure you pay off the entire purchase BEFORE your payments start. This way you can avoid all those pesky interest fees.

Shop Safely

Last year Target fell victim to a massive security data breach. Millions of Black Friday shoppers had credit card info and valuable personal information stolen. Data breaches seem to be showing up more and more in today’s tech filled world. If you fall victim to one, your credit could suffer for the rest of your life.

The simplest solution to this: Pay in cash! If you are going out shopping this Black Friday, it might be a good idea to swing by the bank and take your shopping budget with you. This way you can protect yourself against cyber criminals and stay within your budget as well.


For more do’s and dont’s of credit, consult our credit blog here!

For more information on data breaches, check out Data Breaches: Why you Should Worry

Data Breaches: Why You Should Worry

It’s your day off, and you’re out picking up some groceries at WalMart. After the cashier is finished ringing you up,  you pull out your AMEX and swipe to pay without thinking twice.

 On the way home you stop by Target to pick up that rug that you’ve been eyeing up for the past few months. (You’ve been told it would really tie the room together.) This time you swipe your VISA bank card to pay.

 What you’re not thinking about is how WalMart and Target have your personal information tucked away in their databases, potentially putting your personal information at risk in the event of a data breach.

Internet Heists Are Real

 You’ve seen the movies where a group of gangsters team up to knock off a jewelry store, only to escape in their getaway car just seconds before police can apprehend them. Data breaches are not much different. The gangsters are hackers, the diamonds are your personal information, and the getaway car is the internet. In a technology driven world, it is becoming easier every day for hackers and Identity thieves to get their hands on your personal information.

Last December we received a rude awakening when it was made public that Target had a massive data breach, potentially compromising more than 40 million customer’s credit and debit accounts. Since then, there have been major data breaches almost every month. Those data breaches include: Michaels Stores, The Home Depot, Sally Beauty Supply, eBay, AOL, P.F. Chang’s, and most recently JP Morgan Chase. In 2013 alone,  there were more than 600 data breaches, costing the USA over $100 billion dollars.

Protect Yourself Against Data Breaches

By now you’re probably thinking “This seems hopeless, What can I do to protect myself?”. Nearly one fifth of Americans suffer from data breach attacks. All is not lost, there ARE ways to protect yourself!

  1. Check Your Accounts Often: The sooner you realize there’s a problem, the better. It is ideal to check all your credit and bank accounts daily. Make sure everything is in order and there’s no suspicious activity.
  2. Change pins/passwords: By constantly changing your pins and passwords, you are staying one step ahead of hackers. If a data breach occurs and they have your outdated password or pin, they will not be able to access your accounts.
  3. Use Gift Cards/Prepaid Cards: Another great way to stay ahead of the game is to use gift cards or prepaid credit cards. This way you can swipe away without having to worry about any personal information being compromised.
  4. Use Cash: Cash is king! We lost that long ago. Cash is untraceable and accepted almost everywhere.
  5. Call Better Qualified: We can help protect you against Identity Theft. Go to and sign up for our credit monitoring service, or call us at (888) 533-8138. We’ll go over your credit report with you and make sure you don’t have any fraudulent activity on it.

For more information on data breaches, watch me on CBS here:

Target Breach: How to Lose Friends and Alienate Customers

Target’s response to its recent breach is a good lesson in what not to do after a company experiences a security incident. Other corporations facing the growing risk of data breaches can learn from the many missteps, if not foolish errors, taken by one of the nation’s largest retailers.

The company’s first mistake was bad timing. Hackers stole confidential data of up to 110 million Target customers who shopped at stores from Nov. 27 to Dec. 15. But instead of proactively announcing the breach, Target got scooped by respected security blogger Brian Krebs.
Krebs broke the story on Dec. 18. On the same day, Target CEO Gregg Steinhafel issued the statement that “we are pleased with Target’s holiday performance.” The company confirmed the breach only after the U.S. Secret Service and American Express released their own investigations.

From there, Target made two more egregious errors that sent the wrong message to customers and may jeopardize its financial security.

The first was an email that notified customers of the breach and offered them one year of free credit monitoring through Experian. Here are the problems with that approach:

• The email included a suspicious sender with the address: instead of Plus, it directed users to click on a link for additional details on the monitoring. The bizarre “bfi0” in the subdomain suggested nothing official to differentiate it from phishing and malware-laden emails sent by scammers following such corporate data breaches; scammers often make subtle tweaks.

• Target should have known that customers are conditioned to not click on links in email messages, especially after a headline-grabbing security breach and with a questionable sender address.

• Many people who received that email—myself included—didn’t actually shop at Target during the compromised dates, which made the email appear even more like a scam.

• Because the notice was delivered via email and probably due to the fact that it originated from a suspicious email address the original message ended up in junk mail boxes. I only looked at the Target email because I was looking for a good example of a phishing email following a data breach.

But the gravest error by Target was to offer free credit monitoring. It may seem counterintuitive, but it has become a routine mistake companies make in the aftermath of a security breach that involves payment cards rather than Social Security numbers (SSNs). Though offering credit monitoring is usually an attempt to reassure consumers, this may instead give them a false sense of security and lead to more consumer blowback. Here’s why:

• Credit monitoring won’t help people impacted by a payment card breach. Credit monitoring is a service that is limited to looking at changes to your credit file. It looks for new creditors, credit accounts and key account changes, such as an address change, that have been reported to Experian, Equifax, or TransUnion. What credit monitoring does not do is monitor your existing credit accounts. So, if a Target customer enrolls in the credit monitoring solution provided by Target, that customer would not be alerted if an existing account—in this case credit cards and payment cards—was used fraudulently. The only way for Target customers to find out if an existing credit or payment card is misused is by monitoring their payment card accounts for suspicous activity. All suspicious activity should immediately be reported to their payment card issuer. While banks and card companies are aware of this incident, some customers of smaller financial institutions may think they are safe when they enroll in the credit monitoring only to find that their card has been maxed out at the end of the month.

• Were SSNs stolen? By most accounts, including Target’s, no SSN’s were exposed in this breach. Based on the nature of the breach and the very limited cicumstances that Target would have needed to collect SSNs, it is unlikley that the exposure of SSNs was part of the fact pattern here. This is important because without the exposure of a SSN, the creation of new credit lines and accounts, which creditors report to the credit bureaus and which then show up on an individual’s credit file(s), is incredible unlikely. So again, it begs the question: Why was a tool that doesn’t monitor the actual risk here offered when no SSNs were exposed and it simply won’t help? (See point 1)

• Even if credit monitoring were effective or called for here, one year of free credit monitoring often isn’t long enough. Even if SSNs were exposed in this breach, which they weren’t, organized thefts of information by criminal rings, as is likely the case here, create exposures that surpass one year. Organized rings often will know that a breach of information was disclosed. They are aware that people may place 90-day fraud alerts or be enrolled in a year of monitoring as a result. So what do they do? Well, they simply hold on to the information for a year. Since there is no expiration date on an SSN (until you expire, that is) customers may initially breathe a bit easier with a year of credit monitoring. But they shouldn’t assume that stolen information can’t be abused afterward. Identity thieves can simply sit on collected data until 2015 or later.

• The sign-up process for the monitoring offered is not consumer friendly by nature. Some providers of credit monitoring have a one-step process: You simply enroll and once you have been authenticated and signed up, your monitoring is active and no further steps are required. But the Target/Experian process involves a two-step enrollment process. So once you have been authenticated and signed up, you are then sent a verification email to enroll. Enrollment is only completed and active when you click on a link in the verification email, which often either a) winds up in a Spam folder and/or b) is forgotten by the consumer. The e-mail is then never clicked for activation and the consumer is left thinking they are enrolled in monitoring when, in fact, they are not. Regulators do not like this two-step sign-on proces for the very reason that so many consumers do not, by no fault of their own, end up getting enrolled. In fact even the Consumer Financial Protection Bureau director Richard Cordray mentioned this in a recent appearance on The Daily Show with Jon Stewart. While he was referencing monitoring and other services paid for by the consumer, he said, “What they don’t tell you is maybe there’s an extra step or two to actually get the product. Months later when you go to seek the protection, they say, ‘Oh you didn’t have it.’ That’s wrong. That’s totally unfair.” And when it comes to consumer protection by the Federal Trade Commission, CFPB, or even state offices of the Attorney General, the last thing you want to hear is the word “unfair” in relation to treatment of a consumer.

The bottom line: Credit monitoring can be useful when it’s an ongoing service and not presented as an easy fix to a problem it will not solve, which is the case with the Target breach. It shouldn’t be used as a replacement for careful consumer vigilance. This means regularly looking over your existing accounts and cards for suspicious activity and charges in addition to monitoring your actual credit files.

While Target management was likely following the advice of its counsel, business units, compliance folks and potentially even regulators, this breach is a good opportunity for companies large and small to rethink their ‘boilerplate’ approach to breach remediation in exchange for solutions and advice to consumers that fit the actual risks. It is also a good lesson in how communicate with the public and impacted consumers, or in the least, a lesson in how not to communicate and respond to a breach.

Eduard Goodman is chief privacy officer at IDentity Theft 911.
– See more at:

Kansas case puts face on ‘total identity theft’

Roxana Hegeman

October 23, 20

WICHITA, Kan. (AP) — When Candida L. Gutierrez’s identity was stolen, the thief didn’t limit herself to opening fraudulent credit and bank accounts. She assumed Gutierrez’s persona completely, using it to get a job, a driver’s license, a mortgage and even medical care for the birth of two children.

All the while, the crook claimed the real Gutierrez was the one who had stolen her identity. The women’s unusual tug-of-war puts a face on “total identity theft,” a brazen form of the crime in which con artists go beyond financial fraud to assume many other aspects of another person’s life.

The scheme has been linked to illegal immigrants who use stolen Social Security numbers to get paid at their jobs, and authorities fear the problem could soon grow to ensnare more unsuspecting Americans.

“When she claimed my identity and I claimed it back, she was informed that I was claiming it too,” said Gutierrez, a 31-year-old Houston elementary school teacher. “She knew I was aware and that I was trying to fight, and yet she would keep fighting. It is not like she realized and she stopped. No, she kept going, and she kept going harder.”

A 32-year-old illegal immigrant named Benita Cardona-Gonzalez is accused of using Gutierrez’s identity during a 10-year period when she worked at a Topeka company that packages refrigerated foods.

For years, large numbers of illegal immigrants have filled out payroll forms using their real names but stolen Social Security numbers. However, as electronic employment verification systems such as E-Verify become more common, the use of fake numbers is increasingly difficult. Now prosecutors worry that more people will try to fool the systems by assuming full identities rather than stealing the numbers alone.

For victims, total identity theft can also have serious health consequences if electronic medical records linked to Social Security numbers get mixed up, putting at risk the accuracy of important patient information such as blood types or life-threatening allergies.

Federal Trade Commission statistics show that Americans reported more than 279,000 instances of identity theft in 2011, up from 251,100 a year earlier. While it is unclear how many of those cases involve total identity theft, one possible indicator is the number of identity theft complaints that involve more than one type of identity theft — 13 percent last year, compared with 12 percent a year earlier.

Nationwide, employment-related fraud accounted for 8 percent of identity theft complaints last year. But in states with large immigrant populations, employment-related identity fraud was much higher: 25 percent in Arizona, 15 percent in Texas, 16 percent in New Mexico, 12 percent in California.

Prosecutors say that the longer a person uses someone else’s identity, the more confident the thief becomes using that identity for purposes other than just working.

Once they have become established in a community, identity thieves don’t want to live in the shadows and they seek a normal life like everybody else. That’s when they take the next step and get a driver’s license, a home loan and health insurance.

“And so that is a natural progression, and that is what we are seeing,” said Assistant U.S. Attorney Brent Anderson, who is prosecuting the case against Gutierrez’s alleged impostor.

Gutierrez first learned her identity had been hijacked when she was turned down for a mortgage more than a decade ago. Now each year she trudges to the Social Security Administration with her birth certificate, driver’s license, passport and even school yearbooks to prove her identity and clear her employment record.

She spends hours on the phone with creditors and credit bureaus, fills out affidavits and has yet to clean up her credit history. Her tax records are a mess. She even once phoned the impostor’s Kansas employer in a futile effort to find some relief.

Both women claimed they were identity theft victims and sought to get new Social Security numbers. The Social Security Administration turned down the request from Gutierrez, instead issuing a new number to the woman impersonating her. And in another ironic twist, Gutierrez was forced to file her federal income tax forms using a special identification number usually reserved for illegal immigrants.

“It is such a horrible nightmare,” Gutierrez said. “You get really angry, and then you start realizing anger is not going to help. … But when you have so much on your plate and you keep such a busy life, it is really such a super big inconvenience. You have to find the time for someone who is abusing you.”

When Gutierrez recently got married, her husband began researching identity theft on the Internet and stumbled across identity theft cases filed against other illegal immigrants working at Reser’s Fine Foods, the same manufacturer where Cardona-Gonzalez worked. He contacted federal authorities in Kansas and asked them to investigate the employee working there who had stolen his wife’s identity.

The alleged impostor was arrested in August, and her fingerprints confirmed that immigration agents had encountered Cardona-Gonzalez in 1996 in Harlingen, Texas, and sent her back to Mexico.

Cardona-Gonzalez did not respond to a letter sent to her at the Butler County jail, where she is awaiting trial on charges of aggravated identity theft, misuse of a Social Security number and production of a false document.

Her attorney, Matthew Works, did not respond to phone calls and emails seeking comment. Court filings indicate the two sides are negotiating a plea agreement.

Citing privacy issues, the Social Security Administration declined to discuss the Gutierrez case. Reser’s Fine Foods did not return a message left at its Topeka plant.

Anderson expects more cases of total identity theft “because we all know what is going on out there — which is thousands and thousands of people who are working illegally in the United States under false identities, mostly of U.S. citizens, and very little is being done about it. But we are doing something about it, one case at a time.”

Identity Theft Tops List of Tax Scams

Published: Tuesday, 17 Apr 2012 | 4:51 PM ET
By: Scott Cohn
CNBC Senior Correspondent



For Angela Beasley of Miami, tax time seemed especially promising this year. After doing her taxes with Intuit’s popular TurboTax software, she found she was due a refund of nearly $5,000.

Anxious to get the money as quickly as possible, she paid the extra fee to file her return electronically. Then, she clicked “send.” After a delay, she said, an unusual message popped up on her screen:

“Your transmission didn’t go through,” it said. “A tax return with the same Social Security number has already been submitted — in other words, it appears you’re trying to e-file the same return twice.”

She says she was not quite sure what had happened until she went to work the next day and learned that many of her co-workers had had the same experience. Read how the US taxes for expats and nomads work.

Beasley and her colleagues are among the nearly half-million taxpayers since 2008 who have been victims of identity theft.

“It feels like you have no control over what can happen with your finances or your personal information. Like you have no control over anything and that anything can happen to you,” Beasley said.

With most returns now filed electronically, all it takes is a Social Security number to file a return and claim a refund. And since many companies that provide electronic filing services offer instant refunds in the form of debit cards, fraudsters can be spending the money within days.

The IRS puts identity theft at the top of its “Dirty Dozen Tax Scams” for 2012. As of January, the agency had active identity theft cases in 22 states, and said its fraud filters caught 262,000 fake returns in 2011 compared with just 49,000 in 2010. But authorities know it is just the tip of the iceberg.

In Tampa, Fla., one of the earliest places where the fraud showed up, authorities say drug dealers and other hardened criminals have turned to tax identity theft instead because it is so easy, is far less risky, and, they apparently think, victimless.

“I’ve never seen individuals involved in a specific type of a crime that so readily admit what they’re doing. They don’t see anything wrong with it. Taking the government’s money is not wrong in their eyes,” said Tampa Police Chief Jane Castor, whose department has made several big arrests, including a sweep last fall dubbed “Operation Rainmaker,” in cooperation with the U.S. Secret Service and Postal Inspectors.

The operation netted 49 arrests, and authorities say it intercepted $100 million in proceeds from the fraud. But Castor says since then, the fraud has only grown.

“We thought that Operation Rainmaker may have slowed this down somewhat, but all indications are it is worse this year, 2012, than it was last year,” Castor said.

Nationwide figures appear to bear that out. The Federal Trade Commission, which is the main U.S. agency monitoring identity theft, says complaints in the category that includes tax refunds have doubled in the past two years.

On this tax day in New York, Manhattan District Attorney Cyrus Vance Jr. announced the indictment of a dozen defendants who allegedly set up a fake job placement web site in order to get Social Security numbers and other identifying information from some 300 victims. They are accused of using that information to obtain more than $450,000 in refunds from the IRS.

By targeting the unemployed, authorities allege, the defendants were able to garner a pool of individuals less likely to have earned income to report to the IRS. That way, returns filed in their names were less likely to raise suspicion.

Elsewhere, authorities have found “cheat sheets” in jails, where criminals share information about where to get Social Security numbers and how to best pull off the fraud.

For victims like Angela Beasley, finding out that her electronic tax form would not go through has been only the beginning of a long and frustrating ordeal.

She says she started with the IRS, which told her to file a return by mail, along with Form 14039, an identity theft affidavit. Then, she says, she was told to call the police.

“I called my local police office, they directed me to call another local police office. I called them and they said, ‘No we don’t take those reports, we don’t report that particular identity theft because it’s so rampant and it’s happened to so many people,’ that they’re overwhelmed and they can’t even deal with it, just call the IRS. But the IRS then asks you if you have a police report,” Beasley said.

Beasley says she has been told it can take anywhere from six months to two years to get her refund back. But that is just the first of her concerns.

“If I made $50,000 and this person has submitted a record to the IRS that I’m making $75,000 a year and threw me into another tax bracket … if I was applying for a student loan or maybe discounted health care this could probably affect me,” she said.

Beasley has channeled her frustration into a blog, “Hacked by TurboTax,” though she acknowledges TurboTax is not to blame for her situation — something a TurboTax spokeswoman is quick to point out as well.

“The blog title is clearly misleading,” Colleen Gatlin wrote in an e-mail to CNBC. “TurboTax has not been hacked nor have identities been stolen from TurboTax at any time.”

Nonetheless, she said, the company is working closely with the IRS to detect and prevent fraud in the face of a “marked increase” in the activity this year.

Castor says it is up to the IRS to tighten its systems. “We can’t investigate our way out of this,” the Tampa Police Chief said.

The IRS says it is working on it. “The IRS takes this issue very seriously and we continue to expand on our screening process in order to stop fraudulent returns and protect innocent taxpayers,” the agency said in a statement.

The agency says it stopped $1.4 billion in refunds from being sent to identity thieves last year, and it is working to speed up the process of resolving cases, a situation complicated by strict privacy laws surrounding tax returns.

The main federal agency dealing with identity theft is the Federal Trade Commission. But by law, the IRS is prohibited from sharing information about individual tax returns — fraudulent or not — with the FTC.

Legislation pending in Congress would toughen penalties for tax return identity theft and broaden the definition of victims, but protect your online identities. Guard your Social Security number, and beware of so-called “phishing” scams, where criminals attempt to access your personal information through official-looking e-mails.

The IRS has posted a list of tips here.

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