FINRA Issues Investor Alert—Tools of the Fake IRS Scam: Phones and Emotions

WASHINGTON–(BUSINESS WIRE)–The Financial Industry Regulatory Authority (FINRA) today issued a new
Investor Alert—Tools of the Fraud Trade: Phones and Emotions—to
warn investors not to send money or provide personal information
associated with a widespread Internal Revenue Service impersonation scam
that is timed to coincide with the recent deadline for anyone who filed
a federal tax extension this past April. FINRA’s Securities
Helpline for Seniors–HELPS™
recently has received calls from
investors who are among the more than 700,000 people who have reported
getting impersonation calls since the scam first surfaced in 2013.

The scam is an example of fraudsters using a very personal resource—your
phone—as a weapon to try to take your money. The caller claims to be
from the IRS, sounds official, speaks aggressively and demands immediate
payment of taxes on the spot. Sometimes there are threats—pay up now or
face arrest or some other serious consequence.

“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 severs the emotional hold the fraudster 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.

Investors can obtain more information about, and the disciplinary record
of, any FINRA-registered broker or brokerage firm by using FINRA’s
BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2014,
members of the public used this service to conduct 18.9 million reviews
of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or
by calling (800) 289-9999. Investors may find copies of this
disciplinary action as well as other disciplinary documents in FINRA’s
Disciplinary Actions Online database. Investors can also call FINRA’s Securities
Helpline for Seniors
 at (844) 57-HELPS for
assistance or to raise concerns about issues they have with their
brokerage accounts and investments.

FINRA, the Financial Industry Regulatory Authority, is the largest
independent regulator for all securities firms doing business in the
United States. FINRA is dedicated to investor protection and market
integrity through effective and efficient regulation and complementary
compliance and technology-based services. FINRA touches virtually every
aspect of the securities business – from registering and educating all
industry participants to examining securities firm, writing rules,
enforcing those rules and the federal securities laws, and informing and
educating the investing public. In addition, FINRA provides surveillance
and other regulatory services for equities and options markets, as well
as trade reporting and other industry utilities. FINRA also administers
the largest dispute resolution forum for investors and firms. For more
information, please visit www.finra.org.

Contacts

Financial Industry Regulatory Authority (FINRA)
Ray
Pellecchia
, 212-858-4387

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