As Americans rush to donate to the victims of Monday's Boston Marathon bombing, watchdog groups are warning of potential online scammers already looking to profit from the tragedy.
Within hours of the bombing, dozens of website domain names referencing the bombing were registered, including bostonmarathondonations.com, bostonmarathonvictimfund.com and bostonmarathonattack.com.
It's too early to know what websites like these will be used for, yet nonprofit experts say that charity fraud is often perpetrated in the days and weeks after tragedy hits and are warning consumers to be on guard.
While some scammers solicit donations, others use fake charities to steal credit card numbers or to infect computers with malware, often with a link promising "exclusive" news or video of the incident.
One fraudster already tried to dupe the public by setting up a Twitter account minutes after the bombing that claimed to be associated with the Boston Marathon organization. The @_BostonMarathon account promised to donate $1 for every retweet. After users called it out as a fake, Twitter quickly shut the account down -- but not before it received more than 50,000 retweets.
"Social media, in particular, makes it very easy to reach a lot of people quickly, when emotions are running high and people feel the need to take action, any action, to help," H. Art Taylor, president and chief executive officer of the Better Business Bureau's Wise Giving Alliance said.
Citing the bogus Twitter account, the organization warned Tuesday that more Boston-related scams were "likely" and urged consumers to do their homework before donating to any group or individual soliciting donations.
As Superstorm Sandy approached in late October, more than 1,000 Sandy-related Internet domains had been registered.
The New Jersey Attorney General and Division of Consumer Affairs are currently suing to shut down a website for the Hurricane Sandy Relief Foundation, which they say raised more than $630,000 in cash donations yet gave less than 1 percent to victims. A judge is expected to rule next week.
The foundation and its attorney did not respond to requests for comment although the organization's attorney has told other news sources that they intended to disburse the funds.
After December's elementary school shooting in Newtown, Conn., a Bronx woman allegedly posed as the aunt of a victim to collect bogus donations through a Facebook campaign and Paypal, according to federal prosecutors.
Watchdogs Warn of Bogus Boston Marathon Charity Sites
Identity thieves are increasingly getting hold of taxpayers' names, Social Security numbers, birth dates and other information, then fraudulently claiming tax refunds in their names.
In response, the IRS has been updating its fraud screening systems and penalizing more identity thieves. Last year, the agency stopped $20 billion in fraudulent refunds from being issued -- up from $14 billion in 2011. And earlier this year, it launched a nationwide crackdown that brought enforcement actions against 389 identity theft suspects in 32 states. The IRS has also more than doubled its staff devoted to identity theft cases.
If you get a notice from the agency that more than one return has been filed under your name, it may mean your identity has been compromised. If you suspect that's the case, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490. And if you are in fact a victim, expect a longer wait for your refund.
Have you received an e-mail that appears to be from the IRS? It's probably not. Instead, it could be from a scammer who will try to use any information you reply with to steal your identity and money. The IRS does not use e-mail, texts or social media to contact taxpayers for personal or financial information, so relay any such messages to firstname.lastname@example.org.
When choosing a preparer, make sure he or she has an IRS Preparer Tax Identification Number (PTIN). If a preparer doesn't put this number on your tax return as required, or fails to sign the form, that should raise a red flag. And watch out for preparers who base fees on the size of your refund or promise refunds that sound too good to be true.
Complaints about shady tax preparers can be submitted via Form 14157.
The IRS has been cracking down on taxpayers illegally hiding income abroad. Launched in 2009, the agency's voluntary disclosure program has already raked in $5.5 billion in back taxes, interest and penalties from tax cheats for illegally hiding assets in offshore accounts.
If you have a legitimate account abroad, you won't get in trouble if you properly complete the reporting requirements. But by failing to disclose assets held in offshore accounts, you risk huge penalties -- including a fine of $100,000 or 50% of the account balance, whichever amount is greater.
Be skeptical of flyers and advertisements promising you "free money" from the IRS. Scammers have been targeting low-income and elderly people, often through community churches, convincing them to claim credits they aren't entitled to -- and even Social Security rebates that don't exist.
These con artists often charge up-front fees and disappear without a trace before the claims are rejected by the IRS. And along with losing whatever they gave the scammer, victims could also end up owing the IRS a hefty $5,000 penalty for making intentional errors on their return.
In the wake of disasters like Superstorm Sandy, scammers come out of the woodwork and solicit donations for bogus charities. Some will even impersonate the IRS and contact disaster victims, claiming to be able to help them file casualty loss claims or obtain refunds. Others will steal victims' identities by asking for Social Security numbers and personal information.
Reporting higher income or expenses so that you qualify for bigger refundable credits may sound tempting, but doing this can get you in big trouble with the IRS. If you get caught, you'll have to return any refund you fraudulently received and pay interest and penalties on any amount owed.
If someone tries to convince you to file a 1099-OID to claim money the federal government is allegedly holding in a secret account for U.S. citizens, don't fall for it. The IRS says this is a common scam -- and not only will you not receive a refund, you could face big fines and even jail time.
Claiming that filing a tax return is voluntary, that only gold-based money is taxable, or that your state isn't part of the United States won't get you out of paying your taxes. These are considered frivolous arguments and will be swiftly rejected.
Taxpayers who fall prey to schemes convincing them to file Form 4852 (a substitute W-2 form) or a corrected Form 1099 in order to falsely reduce their taxable income to zero could face a penalty of $5,000.
The IRS is on the lookout for firms hiding their true identities by using third parties or forming corporations to make it harder for the IRS to figure out who is the true owner. By creating such entities, some businesses underreport income, fail to file tax returns, claim bogus deductions and even launder money.
Schemes recommending that you transfer money into trusts to reduce your income and avoid paying taxes are common, and the IRS has seen a growing number of people improperly stashing money in private annuity and foreign trusts. To avoid getting caught up in an illegal trust arrangement, the IRS recommends consulting with a tax professional.