Tax Refund Fraudsters Use SSA’s Death Index to Steal Kids’ Identities

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Have you ever heard of the Social Security Administration’s (SSA) Death Master File? It is the latest tool used by fraudsters to steal identities. According to a report by Scripps Howard News Service, ”Crooks are pocketing fraudulent tax refunds after filing returns with personal information about recently deceased people found in the Social Security Administration’s Death Index Master File.

”The Internal Revenue Service…estimates that fraudsters improperly submitted 350,000 returns on dead Americans this tax season, improperly seeking $1.25 billion in refunds.” The parents of deceased children are increasingly at risk. Once the fraudster has obtained ”the deceased child’s Social Security Number and other personal information, the crooks falsely claim them as dependents and have the funds routed to them.”

The article quotes a former manager at the Federal Trade Commission’s Identity Theft Program in saying, ”Criminals have found the perfect loophole. It doesn’t give the IRS time to detect that something is wrong. By the time they do, the money is already out the door.” (The IRS needs to do detect fraud earlier in the process.)

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Social Security death list enables dead children’s ID theft,” by Thomas Hargrove and Isaac Wolf, published by Scripps Howard News Service, Nov. 3, 2011.

WASHINGTON – A little-known but widely used federal database meant to protect Americans from fraud has itself become a major source of mischief and misery.

Crooks are pocketing fraudulent tax refunds after filing returns with personal information about recently deceased people found in the Social Security Administration’s Death Master File, which is widely available on the Internet, federal authorities and consumer experts say.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.