Stolen Tax Refund Returned After Vanishing in Sophisticated Scam - NBC Chicago
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Stolen Tax Refund Returned After Vanishing in Sophisticated Scam

NBC 5 helps return $3,200 refund stolen in scam targeting taxpayers through their tax preparer

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    NEWSLETTERS

    The victim of a scam that targets tax preparers and their clients finally has his money back, months after he was snared in the scheme. Lisa Parker reports.

    (Published Wednesday, June 7, 2017)

    The victim of a scam that targets tax preparers and their clients finally has his money back, months after he was snared in the scheme.

    "This has been a completely exhausting process," Chicagoan Jonathon Shaw told NBC 5 Responds.

    Shaw, whose story we first covered back in April, said this year’s tax refund was set to be his biggest ever at $3,820 -- until it vanished into thin air.

    Shaw told NBC 5 Responds that his Michigan-based accountant was hit by hackers who infiltrated her email server, intercepted emails with his tax refund details and then impersonated him. The hackers managed to convince the accountant to re-route Shaw's refund, pretending to be him and writing from an email address that was similar to his authentic one.

    The IRS warned accountants nationwide about this scam this spring, specifically telling them to be alert for requests to reroute tax refunds away from original bank accounts and onto prepaid debit cards.

    That is exactly what Shaw's accountant did in this case. NBC 5 Responds questioned Shaw’s accountant on multiple occasions, after she first declined to pay her client back the money that was stolen after she diverted it.

    We consulted a cybersecurity expert, who said it was clear that the accountant missed one giant red flag: the request to divert the refund away from the bank account and onto a prepaid card.

    "The IRS has been warning tax preparers as of late about these very types of scams. The issue is that with these smaller businesses--it's like a consumer…you almost don't think it can happen to you right? You're such a small target,” Javelin Research & Strategy Senior Vice President Al Pascual told NBC 5 Responds.

    Pascual said tax preparers need to be the front line of prevention when it comes to the scam, because it is clear the IRS is neither likely to catch it on the front end, or be equipped to step in and refund the money after it is gone. He said while prepaid cards have multiple legitimate uses, both consumers and tax preparers should be wary of requests to funnel refunds onto them.

    “Criminals like them … and they're going to find ways to re-route refunds. They like money as much as the next guy. So you are definitely a target and that's what happened in this case,” Pascual said.

    NBC 5 Responds circled back to Shaw’s accountant to inform her that cybersecurity experts we interviewed said she bears some responsibility for not catching the fraud when she received and replied to emails that did not originate from her client’s authentic email account.

    The tax preparer, whose name we agreed not to include in this story since she does not operate any businesses in Chicago, then agreed to reimburse Jonathon Shaw the majority of his money, admitting that she had not shored up the security of her IT system before doing this year's returns, and also acknowledging her insurance does not include coverage for hacking and terrorism-related incidents. She and Shaw agreed on a reimbursed amount of $3,200.

    “I’m just so appreciative to NBC 5 for going to my accountant, saying, ‘Hey, all signs are pointing to you,’” Shaw said.

    He said he is relieved to have his money back, along with some peace of mind.

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