FINRA issued a new investor alert, called Tools of the Fraud Trade: Phones and Emotions, warning investors not to send money or provide personal information to a massive IRS impersonation scam timed to coincide with the recent deadline for anyone who filed a federal tax extension this past April. More than 700,000 people have reported getting impersonation calls since the scam first arose in 2013.

The scam is an example of scammers using personal resources, in this case people’s phones, as a tool to thieve money. The caller says he is with the IRS, sounds official, speaks aggressively and demands immediate payment of taxes on the spot. Oftentimes there are threats of arrest or other serious consequences.

“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 breaks the emotional hold the scammer 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.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.