FINRA Issues Investor Alert—Tools of the Fake IRS Scam: Phones and Emotions
Ray Pellecchia (212) 858-4387
WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today issued a new Investor Alert—Tools of the Fraud Trade: Phones and Emotions—to warn investors not to send money or provide personal information associated with a widespread Internal Revenue Service impersonation scam that is timed to coincide with the recent deadline for anyone who filed a federal tax extension this past April. FINRA's Securities Helpline for Seniors–HELPSTM recently has received calls from investors who are among the more than 700,000 people who have reported getting impersonation calls since the scam first surfaced in 2013.
The scam is an example of fraudsters using a very personal resource—your phone—as a weapon to try to take your money. The caller claims to be from the IRS, sounds official, speaks aggressively and demands immediate payment of taxes on the spot. Sometimes there are threats—pay up now or face arrest or some other serious consequence.
"When someone says they are from a government agency like the IRS, many of us may accept the statement as true," said Gerri Walsh, FINRA's Senior Vice President for Investor Education. "Psychologists and behavioral economists have a name for the tactic these IRS impersonators use. It's called source credibility, and it's extremely powerful."
The alert advises ending a conversation with any unsolicited caller as quickly as possible. This severs the emotional hold the fraudster has on potential victims. In addition, the alert notes that the real IRS will not:
- demand that you pay taxes and not allow you to question or appeal the amount that you owe;
- require that you pay your taxes a certain way, such as with a prepaid debit card;
- ask for credit or debit card numbers over the phone; or
- threaten to bring in police or other agencies to arrest you for not paying.
After you hang up, if you feel the need to double check, call the IRS at 1-800-366-4484 to determine if the caller is an IRS employee with a legitimate need to contact you.
Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2014, members of the public used this service to conduct 18.9 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999. Investors may find copies of this disciplinary action as well as other disciplinary documents in FINRA's Disciplinary Actions Online database. Investors can also call FINRA's Securities Helpline for Seniors at (844) 57-HELPS for assistance or to raise concerns about issues they have with their brokerage accounts and investments.
FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating all industry participants to examining securities firm, writing rules, enforcing those rules and the federal securities laws, and informing and educating the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers the largest dispute resolution forum for investors and firms. For more information, please visit www.finra.org.