Tax scam has phones ringing off hook

The message on Jeri Thompson's answering machine was direct and threatening.

She owed the Internal Revenue Service money — and if she didn't pay up immediately, she would be arrested.

It's a call that has been sending chills through a growing number of Hoosiers in recent weeks. And it's bogus. A scam.

The phone scam — in which the caller poses as an IRS agent and tries to get the victim to make an immediate payment to cover past-due taxes — "is one of the fastest-growing and most widespread call scams" reported in recent years in Indiana, according to Attorney General Greg Zoeller.

"The reason this scam is so successful and pervasive is that people fear the IRS and may be willing to take rash actions to avoid trouble," Zoeller said in a statement issued by his office Friday.

"Unfortunately, once you pay these criminals, that money is likely lost forever. Do not make any type of payment or give out any personal information to a caller unless you have verified the caller yourself and initiated the call. Gone are the days when we can pick up the phone and trust the person on the other end."

So far this year, the attorney general's consumer fraud division has received more than 550 complaints — an average of more than four a day — about the IRS scam. That follows more than 1,100 complaints in 2014. And, officials say, it is likely that only a fraction of the IRS scam calls ever get reported.

Thompson, who lives in Johnson County, knew the message left on her answering machine last month was bogus.

"The caller's English was very broken," she explained, "and the way he talked just didn't make any sense."

But the caller did leave a phone number and a warning: If she disregarded the call, the police would be called to arrest her.

"So I decided to beat them to it," Thompson said.

She called the Johnson County Sheriff's Department and made a report about the attempted fraud.

"The main reason I reported it," she said, "was so they would have the (caller's) number on file."

Thompson said her mother-in-law and a friend also received similar calls in recent weeks. While neither fell for the scam, she knows there are some people who might.

"Every time people hear IRS or federal government, they start getting nervous," she said. "It just breaks my heart to think that one of your loved ones or an older, trusting person would fall for for it."

The bogus IRS call has displaced the "Rachel from Cardholder Services" call scam as the most-reported, according to the the AG's office.

In that scam, which has generated 490 complaints so fair in 2015, the Better Business Bureau reports: "Callers who respond to 'Rachel's' fake offer to lower their credit card interest rates find that at best the scammer only sets up a three-way call with the consumer and their credit card company to request a rate reduction. This is an action that any cardholder could undertake themselves for free. Instead, Rachel charges for this 'service,' sometimes between $495 and $1,595 ... even in cases where the rate was not lowered by their card company."

The AG's office received 3,487 complaints about the credit card scam in 2014 and 3,812 in 2013.

Those numbers — like the 552 complaints the AG's office has received about the IRS call scam so far this year — are likely only the tip of the iceberg, said spokeswoman Jaime Barb.

"A lot of people probably don't know this is part of what the attorney general does," she explained. "I'm sure there are more where those came from."

The callers behind the IRS scam often tell their victims a warrant had been issued for their arrest, and demand payments of $3,000 to $4,000. They typically ask for the payment to be made through a prepaid card. Both should be red flags.

The AG's statement said the IRS "will never initiate contact over the phone." Instead, the first contact will always be "through official correspondence by mail." And the IRS will never ask you to make a payment by credit card, debit card or prepaid card.

If you receive one of these calls, the attorney general recommends that "you should hang up immediately and report the scam to the IRS."

The number to report to the IRS is (800) 829-1040. Reports also can be made to the AG's office by filing a complaint online at www.IndianaConsumer.com or by calling (888) 834-9969.

The prevalence of this and other phone-based scams, Zoeller said in the statement, should serve as a reminder for Hoosiers to register their cell and land-line phone numbers on the state's Do Not Call list. The next quarterly deadline to have your phones added to that list is Tuesday, May 19. You can sign up for the no-call list at www.IndianaConsumer.com or by calling (888) 834-9969.

The two other most common telephone privacy complaints received by the attorney general so far in 2015 are:

• Credit Services Scam (remember "Rachel") offering to lower credit card interest rate for a fee (490 complaints).
• Tech Support Scam, offering phony tech services to gain remote access to your computer (231 complaints).

Tim Evans is The Star's consumer advocate. Call him at (317) 444-6204 and follow him on Twitter: @starwatchtim