Businesses Hit by More W-2 Fraud as Cybercriminals Shift Tax Season Targets

Businesses, not individuals, are more frequently targeted with scams as cybercriminals try to cash in on tax season.

Every year, cybercriminals cash in on tax season by targeting individuals, but this year its a little different. Its businesses that must be extra careful when filing, because businesses are experiencing a rise in tax-related scams, specifically W-2 fraud.
Researchers at IBM X-Force, the tech giants security research division, discovered more than 1400% growth in general tax-themed spam between December 2016 and March 2017.
On top of all the usual activity -- consumer tax fraud, filing on others behalf -- we began to see that businesses are being targeted a lot more, says Limor Kessem, executive security advisor for IBM Security.
In the past, she says, tax fraud on businesses were the purview of only advanced attackers. This year, they saw a rise in social engineering attacks on smaller organizations like schools, non-profits, and restaurants as fraudsters start to aim for the low-hanging fruit of the corporate world.
Cybercriminals often collect W-2 data by pretending to be a company exec and emailing HR or payroll for employee information, which is used to file fraudulent returns and collect refunds. In addition, they may also request a wire transfer to a specific bank account.
Attackers who are more technically inclined may bypass the fake emails and breach an organizations servers to steal data directly, says Kessem.
In addition to using W-2 data for their own scams, fraudsters will sell it on the dark web, the
report states
. The most valuable bundles of information are called Fullz and contain the victims address, contact info, Social Security and drivers license numbers, plus all W-2 and W-9 information. Each record runs for $40-$50 in Bitcoin on the Dark Web.
With all this data for $50 per record, harmful activity doesnt have to stop at tax fraud, Kessem notes. Cybercriminals can buy and use this data for other scams like identity theft or online loan applications.
Tax-related risks increase as the filing deadline approaches. One-third of Americans (54 million people) filed their taxes after April 1 in 2016, giving fraudsters a larger window of opportunity to strike. Tax-related cybercrime wont stop after April 18, 2017.
There are a number of people filing after the deadline, says Kessem, noting the popularity of extensions. Criminals dont have to stop then. There are millions who will still be interested in tax-themed emails.
However, their tax scam strategies will shift after the deadline as cybercriminals move from stealing data to infecting machines with malware. Because victims may expect messages indicating problems with their returns, they are more likely to open potentially malicious attachments, Kessem explains.
Researchers believe data sets sold on the Dark Web are a sign that fraudsters are stealing tax info from employer databases -- meaning they get it before the taxpayers. Here are a few steps consumers and businesses can take to protect themselves:
Dont delay:
File as soon as you receive the paperwork. It can take a while to discover if your data has been compromised. Waiting gives cybercriminals more time to use your information.
Ask for verification:
Phishing attacks often pretend to come from popular tax filing software vendors. If you plan to file your own taxes online, access the vendors site directly, and dont click links or open attachments in vendor messages.
Dont answer online requests:
Fake IRS-themed emails use logos and subject lines to trick taxpayers into responding. The IRS never contacts taxpayers via email, text message, or social media to ask for personal data, so dont reply to requests through these channels.
Get an IP PIN:
Set up an Identity Protection PIN (IP PIN), which is a 6-digit number the IRS gives to taxpayers to prevent the misuse of their Social Security number on fraudulent tax returns. Check your eligibility
here
.
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Businesses Hit by More W-2 Fraud as Cybercriminals Shift Tax Season Targets