July 2015

Volume 3, Issue 14

Posted on 7/29/2015

Card Crack: Not What It is Cracked Up to Be

The scam is called card cracking and it may start off innocently enough. Your account holder sees a post on a social media site announcing a contest. Or maybe a webpage that claims to have a celebrity affiliation is offering a gift card giveaway. The variations are endless, but here's the tip-off that fraud is afoot. At some point they are asked for their account information, PIN number, or online banking credential. That's when you can bank on the fact that those "innocent" offers aren't what they're cracked up to be.  


How does the scam work? Once card crackers have access to the account, they deposit multiple checks - usually remotely - and then make quick ATM or money order withdrawals. The goal is to get the cash in hand before the financial institution figures out the checks are phony.


That form of card cracking works like other scams involving the unauthorized use of  account data. You turn over your information for one purpose, only to find out that scammers have used it for their own benefit. 


But that's not the only kind of card cracking. In other variations people respond to a text, video, or social media post promising fast cash or even explicitly promoting card cracking as an easy way to pay the bills. The account holder - often a student - will hand over their debit card number, PIN, or password and allow checks to be run through their account.  In exchange scammers will offer them a small piece of the action. The account holder may try to rationalize it as just a shady way to game the system, but come on. No legitimate business deposits checks that way. What's really going on is fraud and account holders who cooperate with card crackers have stepped in the middle of it.


The scammers hope the payments are enough to keep the account holder from asking too many questions, but the question people should be asking is whether it's worth the risk of involving themselves in criminal activity. Thanks to an ongoing card cracking crackdown, suspects are facing indictments, and people who let their accounts be used may be on the hook for the losses. 


That's not the only risk. Scammers have been known to help themselves to funds legitimately in the account - tuition money or a paycheck, perhaps - or to go on a shopping spree with the person's debit card. If the account holder was in cahoots with the card cracker, it's tougher to argue that the transactions were entirely unauthorized.


Many students heading off to school or joining the work force are opening their first bank accounts. Involvement in a scam like card cracking threatens their financial future. One tip that bears repeating: No above-board contest, social media promotion, or job opportunity requires that people hand over their bank cards, PIN numbers, or online banking credentials. Never give anyone a crack at your account. For more information or to read this article in its entirety, click here


FFIEC Cybersecurity Assessment Tool

The Federal Financial Institutions Examination Council (FFIEC) has issued a Cybersecurity Assessment Tool (Assessment) that institutions may use to evaluate their risks and cybersecurity preparedness. The Office of the Comptroller of the Currency (OCC) examiners will gradually incorporate the Assessment into examinations of national banks, federal savings associations, and federal branches and agencies (collectively, banks) of all sizes.


The Assessment helps institutions and examiners determine an institution's inherent risk profile and level of cybersecurity preparedness. The results may be reviewed to determine whether the institution's cybersecurity maturity levels align with the institution's inherent risk profile. In addition to the Assessment, the FFIEC has also made available resources institutions may find useful, including an executive overview, a user's guide, an online presentation explaining the Assessment, and appendixes mapping the Assessment's baseline items to the FFIEC Information Technology (IT) Examination Handbook and to the National Institute of Standards and Technology's (NIST) Cybersecurity Framework.


For more information, click here.

Volume 3, Issue 13

Posted on 7/22/2015

Proposed Regulations for State-Sponsored ABLE Accounts

The Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE Act) was enacted on December 19, 2014, as part of The Tax Increase Prevention Act of 2014 (P.L. 113-295).


Generally, the ABLE Act permits a state to establish and maintain a new type of tax-advantaged savings program (under Section 529A of the Internal Revenue Code). Contributions may be made to a 529A account that is established for purposes of meeting the qualified disability expenses of the designated beneficiary of the account who is a resident of that state or of a contracting state.


On June 19, 2015, the IRS and the Department of the Treasury released proposed regulations providing rules by which states or state agencies or instrumentalities may establish a qualified ABLE program through which contributions may be made to the account of an eligible disabled individual to meet qualified disability expenses. These accounts are generally disregarded for purposes of certain means-tested Federal programs.


The IRS will develop two new forms that ABLE account programs will use to report relevant account information annually to designated beneficiaries and the IRS: Form 1099-QA for distributions and Form 5498-QA for contributions.


On March 10, 2015, the IRS and the Department of the Treasury issued Notice 2015-18 providing information for states enacting enabling legislation for qualified ABLE Programs before additional guidance was issued to ensure that the citizens of those states could create ABLE accounts during 2015.


If state legislation creating ABLE programs prior to issuance of guidance does not fully agree with the guidance when issued, the Treasury Department and the IRS intend to provide transition relief to provide sufficient time to allow states to implement the changes necessary to avoid the disqualification of the program and of the ABLE accounts already established under the program.


Additional information can be found here.


Six Nigerian Nationals Extradited to Mississippi

The Department of Justice (DOJ) recently announced the extradition of six Nigerian nationals from South Africa to Mississippi to face a nine-count federal indictment for various Internet frauds. These six people join 15 others who were previously charged with, among other things, conspiracy to commit mail fraud, wire fraud, bank fraud, identity theft, and money laundering. 


According to the allegations in the indictment, from as early as 2001, the defendants identified and solicited potential victims through online dating websites and work-at-home opportunities.  In some instances, the defendants allegedly carried on fictitious online romantic relationships with victims for the purpose of using the victims to further certain objectives of the conspiracy.  For example, the indictment alleges that the defendants convinced victims to ship and receive merchandise purchased with stolen personal identifying information (PII) and compromised credit card and banking information, to deposit counterfeit checks, and to transfer proceeds of the conspiracy via wire, U.S. mail or express delivery services. 


If you know someone who lost money or information to romance, reshipping, fake check, or work-at-home scammers, visit DOJ’s announcement. Why? Because there's a list of aliases and email addresses that the defendants allegedly used in carrying out these scams. If you recognize a name or email address, you could help in the investigation of these crimes. 


For more information, click here.  

Volume 3, Issue 12

Posted on 7/8/2015

What You Should Know about Social Security Cards

The current Social Security card consists of specially designed pre-printed banknote paper bearing the words, "Social Security," and the official seal of SSA. The statement, "This number has been established for," is printed across the official seal in the middle of the card. During the card issuance process, the SSN and the number holder's name are impact printed above and below this statement on card printing equipment operated by SSA.


Section 205(c)(2)(G) of the Social Security Act (as amended by section 345 of P.L. 98-21) required prospectively that new and replacement Social Security cards be made of banknote paper and (to the maximum extent practicable) be a card which cannot be counterfeited. SSA consulted with the Bureau of Engraving and Printing, the Government Printing Office, and the Secret Service regarding the anti-counterfeiting features to be incorporated in the new card. Since October 1983, the current card incorporates these and a number of other security features appropriate to a paper card format, such as:

  • The stock is a blue tint marbleized random pattern. Any attempt to erase or remove data is easily detectable because the tint is erasable. The words "Social Security" are printed in white.
  • Planchettes (small multi-colored discs) are randomly placed on the paper stock and can be seen with the naked eye. These yellow, pink, and blue discs can appear anywhere on the card, including the area on the card that contains the seal and identifying information.
  • Intaglio printing of the type used in U.S. currency is used for some areas on the front of the card. Intaglio printing on the card provides a "raised effect" and abrasiveness that can be felt when examined by touch. This printing technology is not widely available and is difficult to replicate.
  • Other security features not obvious to the naked eye are not publicized.

Because of the SSA workload and burden on the public of replacing all cards still in use, SSA does not issue replacement cards whenever new security features are added or a new version of the card is approved. Thus, there are now 47 valid versions of the Social Security card in use; a large number of which are pre-1983 versions without counterfeit-resistant and tamper-proof security features.


Originally, SSA issued the same type of Social Security card to everyone. In May 1982, SSA began printing the legend, "NOT VALID FOR EMPLOYMENT," on the Social Security cards of noncitizens not authorized to work. This legend was added because of the increasing need for people to have SSNs for nonwork purposes, such as reporting taxes to IRS, and INS concerns that unauthorized people could use their SSNs for work. Since the IRS began assigning taxpayer identification numbers to noncitizens for tax purposes when the noncitizen does not meet the requirements for an SSN, there are only a few valid reasons for issuing a nonwork Social Security card. One such reason to issue a nonwork SSN, is to receive Federal benefits. A card with the legend,"NOT VALID FOR EMPLOYMENT," is not acceptable evidence of employment eligibility under IRCA.


On September 14, 1992, SSA began printing the legend, "VALID FOR WORK ONLY WITH INS AUTHORIZATION," on cards issued to noncitizens lawfully in the U.S. with temporary authority to work. In these cases employers must look at the noncitizen's INS document to determine if the noncitizen has current authorization to work in the U.S.


For more information and other things things you should know about the Social Security card, click here


What is an ITIN?

An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. It is a nine-digit number that always begins with the number 9 and has a range of 70-88 in the fourth and fifth digit. Effective April 12, 2011, the range was extended to include 900-70-0000 through 999-88-9999, 900-90-0000 through 999-92-9999 and 900-94-0000 through 999-99-9999. IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number, but who do not have, and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA).

ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.

Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN, unless they meet an exception.

Why is an ITIN used? ITINs are used for federal tax reporting only, and are not intended to serve any other purpose. IRS issues ITINs to help individuals comply with the U.S. tax laws, and to provide a means to efficiently process and account for tax returns and payments for those not eligible for Social Security Numbers (SSNs). 

An ITIN does not authorize work in the U.S. or provide eligibility for Social Security benefits or the Earned Income Tax Credit.

Who needs an ITIN? IRS issues ITINs to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for SSNs. A nonresident alien individual not eligible for a SSN who is required to file a U.S. tax return only to claim a refund of tax under the provisions of a U.S. tax treaty needs an ITIN.

Other examples of individuals who need ITINs include:

  • A nonresident alien required to file a U.S. tax return
  • A U.S. resident alien (based on days present in the U.S.) filing a U.S. tax return
  • A dependent or spouse of a U.S. citizen/resident alien
  • A dependent or spouse of a nonresident alien visa holder 

Are ITINs valid for identification? No. ITINs are not valid identification outside the Federal tax system. Since ITINs are strictly for tax processing, IRS does not apply the same standards as agencies that provide genuine identity certification.

ITIN applicants are not required to apply in person, and IRS does not further validate the authenticity of identity documents. ITINs do not prove identity outside the Federal tax system, and should not be offered or accepted as identification for non-tax purposes.

Are ITINs valid for work purposes? No. ITINs are for federal income tax purposes only. Getting an ITIN does not change your immigration status or your right to work in the United States.

Can ITINs be used as proof of identification to obtain a state driver's license? No. ITINs are not valid for identification outside the Federal tax system. For more information access the DMV communication provided to the state departments of motor vehicles.

What happens if the individual is assigned a Social Security Number (SSN)?
Once a SSN is received that number must be used for tax purposes and the ITIN is discontinued. It is improper to use both the ITIN and the SSN assigned to the same person to file tax returns.  It is the individual's  responsibility to notify the IRS so they can combine all tax records under one identification number.  

Do you have a question or topic that you would like to see addressed in our monthly newsletter? If so, email us and let us know. Send questions and/or topic suggestions to info@bankersecampus.com.