COSTA MESA, Calif.—Consumer awareness of identity theft and tax-related fraud is on the rise this year, and along with it increased concerns over becoming a victim, a new study shows.
But consumers have also indicated they don’t plan to take many of the steps that could protect them.
Experian recently surveyed consumers nationwide for its annual tax study, focusing on a number of tax-related topics including filing habits, identity theft and what they are doing to protect themselves this tax season.
The number of survey respondents familiar with identity theft and tax fraud has risen almost 20% over the past two years, to 76%, Experian said. This is compared with only 57% in 2014 and 63% in 2015. In addition, 42% of respondents are now concerned that someone could access their personal data through their tax return, compared to only 35% in 2014 and 38% in 2015.
“Tax season is a busy time of year for identity thieves,” said Michael Bruemmer, vice president, consumer protection, at Experian. “Those filing taxes, especially electronically, should educate themselves on what precautions need to be taken, and what assistance is available to them if they become a victim of identity theft.”
According to the survey, 28% of respondents have been a victim or know someone who has been a victim of tax fraud. Those who have been affected most commonly file a police report (59%) and place a fraud alert on their credit reports (58%).
Despite the number of people affected by tax fraud, almost half of respondents (45%) aren’t aware of the IRS-issued Identify Protection PIN. An IP PIN is a unique number assigned to eligible taxpayers that helps prevent the misuse of their Social Security number and protects against thieves attempting to file fraudulent federal income tax returns. Furthermore, only 30% of actual victims surveyed requested the IRS-issued IP PIN last year.
Even though the concern over tax fraud has grown significantly, a majority of survey respondents aren’t planning to take the IRS recommended steps to protect themselves. Only 12% are planning to check their credit report, an important first step in monitoring for fraudulent activity that could indicate identity theft. Also, a mere 6% will file their taxes on a computer with up-to-date antivirus software.
Other key survey findings:
Tax filing continues to be increasingly electronic
• Half of the respondents file their taxes themselves, electronically
• Eighteen% scan and save their tax documents electronically, up from 14% in 2015
• More than three-quarters have used electronic fund transfers for tax refunds
Of the 56% of respondents who prepare their own taxes, most do so on their home network
• 76% inside their own home, on a secure network
• 14% at work on a secure network
• 7% outside of the home using free Wi-Fi
Most respondents (80%) expect to receive a tax refund and plan to use it to increase their personal savings or pay down credit card debt
• 41% — savings fund/investment
• 35% — pay off/down credit card debt
• 19% — pay off/down personal loans