Prepaid Reloadable Debit Card Scams
One morning, Mr. Smith* picked up his ringing telephone. He was startled to hear the caller identify himself as an IRS Officer. The caller sounded authoritative, aggressive, and hostile. The caller warned Mr. Smith that he would be arrested within two hours for failure to pay thousands of dollars in back taxes.
Mr. Smith checked caller ID and noticed that the phone number was an IRS toll free number, 800-829-1040. Instantly, Mr. Smith was filled with shock and panic. The caller advised Mr. Smith that he could avoid arrest by withdrawing thousands of dollars in cash and purchasing “tax vouchers.” At the caller’s direction, Mr. Smith purchased several reloadable debit cards at his local supermarket for several hundred dollars each. After Mr. Smith purchased the reloadable debit cards, he scratched the silver coating off the back of the cards to reveal the card numbers. Next, he read the card numbers to the caller and the caller transferred the money from the cards.
The reloadable debit cards, which are sold in various nationwide supermarket chains and stores, must be purchased with cash. The amount is loaded onto the prepaid card. No bank account is required for purchase. Purchasers often use these reloadable debit cards to pay bills or send money.
Eventually, Mr. Smith grew suspicious. He contacted the police and filed a report. Unfortunately, Mr. Smith was unable to retrieve his money because he was unable to identify or locate the caller. Mr. Smith later learned that many scam artists use a practice known as “caller ID spoofing” to disguise the identity of the calling party and to falsify the telephone number which is displayed.
Older adults as victims
Older adults are usually the targets of these scams. The targeted older adult may become extremely alarmed at the threat of a large tax debt, prompting a victim to act quickly and without proper verification.
Some older adults may lack the cognitive capacity to spot or report these crimes. In addition, the victim may feel intense embarrassment or stigma regarding the incident, which prevents him or her from seeking assistance.
Variations of the scam
Mr. Smith is just one of many elderly victims who are being targeted nationwide in several new scams involving reloadable prepaid debit cards. In one variation of this scam, scam artists pose as utility employees and threaten to shut off service unless the victim purchases these prepaid reloadable debit cards. Scam artists also pose as sheriff’s deputies or police officers and inform victims that payment must be made for missing jury duty. In another variation of this scam, scam artists inform victims that they have won cash prizes of hundreds of thousands of dollars but would first have to provide payment via reloadable debit cards to claim their winnings.
According to the San Diego County Sherriff’s Department, Public Affairs Unit, the caller may try to make the pitch very convincing. The caller may give out the name of an actual Sherriff’s Department employee, provide the actual telephone number of a Sheriff’s Station or Substation, or relay some of the victim’s personal information.
In some cases, victims receive a letter in the mail instead of a phone call. The letters are accompanied by a check with instructions to cash the check, to keep a portion of the cash for himself or herself, and to purchase prepaid reloadable debit cards with the rest of the money. Later, the banks discover that the checks are fraudulent and do not clear. The banks request that the victims bring the money back.
Victims have trouble recouping their money because it is difficult to trace the identity and/or location of the caller. It is extremely difficult to bring a lawsuit against an unknown person and/or entity. Therefore, even with assistance, most victims fail to recover any of their money.
The Internal Revenue Service never requests credit card, debit card, or prepaid card information over the telephone. The IRS mails taxpayers written notifications of any tax due. Furthermore, the Sherriff’s department and police departments never contact individuals over the telephone to demand payment.
Follow these tips to avoid becoming the victim of these scams:
- Hang up the telephone immediately.
- Do not purchase reloadable debit cards for any unverified debt.
- Never provide any reloadable debit card numbers to unknown persons. Treat reloadable debit cards like cash, since transactions often cannot be reversed.
- Verify and/or report to the following entities:
- Call the IRS at 800-829-1040 to verify the tax debt, if any. If you do not owe any taxes, call the Treasury Inspector General for Tax Administration (TIGTA) at 800-366-4484 to report the incident. TIGTA is committed to the prevention and detection of fraud, waste, and abuse within the IRS and related entities.
- Call the San Diego Sheriff’s Department at 858-565-5200 to report the incident.
- Submit a complaint to the Federal Communications Commission (FCC). The FCC is a federal agency regulates interstate and international communications through cable, radio, television, satellite and wire. The website is fcc.gov/complaints.
- Contact Elder Law & Advocacy at (858) 565-1392 to consult with an elder law attorney at no charge.
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