Bancorp Didn’t Think it Was Weird to Mail 1,000+ Tax-Refund Cards to the Same Address

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When a tax-refund fraudster left a wallet with 13 debit cards issued in 13 different names — none of them his own — at a United Airlines ticket counter, it raised a few red flags. It also resulted in the bust of a huge tax-refund fraud ring, centered in Florida.

Here is how the fraud works:

  1. Steal someone’s identity.
  2. Use that stolen identity to file a fake tax return using an online service like TurboTax that issues tax refunds on prepaid debit cards. (These prepaid debit cards are basically just a way to add more fees to your refund-anticipation loan. But I suppose that doesn’t matter if you are using a stolen identity and filing a fake tax return.)
  3. Repeat 1,000+ times.

You don’t even have to use very many different tax returns:

11 cards got refunds of exactly $7,396 each; 34 got refunds of exactly $3,823; and 48 of exactly $943.

So this scam is apparently pretty easy. And everyone seems pretty laid back about it, including The Bancorp Inc., which issues a lot of those prepaid debit cards. Apparently it does have some fraud-prevention safeguards in place, but it did not get suspicious when 1,000+ of the tax-refund cards it mailed went to the same address in Florida. Or when a lot of those 1,000+ cards had the same refund amount on them.

138 of those cards had about $360,000 left on them at the time of the bust. So it’s a pretty good scam, if you don’t get caught.

The IRS will get some of the money in those prepaid accounts back from Bancorp, but it’s not clear how much money the fraudsters have already spent, or whether the IRS can get that money back, too. Let’s hope so. The government may need it.