Beware of Form W-2 Phishing Scheme, Authorities Warn

As tax season begins, the IRS is urging employers to educate their HR and payroll staff about a Form W-2 phishing scam that victimized hundreds of organizations and thousands of employees last year.

“The Form W-2 scam has emerged as one of the most dangerous phishing e-mails in the tax community,” the IRS said in a January 2018 alert. During the last two tax seasons, “cybercriminals tricked payroll personnel or people with access to payroll information into disclosing sensitive information for entire workforces,” the alert noted.

Reports about this scam jumped to approximately 900 in 2017, compared to slightly over 100 in 2016, the IRS said. As a result, hundreds of thousands of employees had their identities compromised.

The IRS described the scam as follows:

• Cybercriminals posing as executives send e-mails to payroll personnel requesting copies of Forms W-2 for all employees, using a technique known as business e-mail compromise (BEC) or business e-mail spoofing (BES).

• The Form W-2 contains the employee’s name, address, Social Security number, income and withholdings. Criminals use that information to file fraudulent tax returns, or they post it for sale on the dark net.

• The initial e-mail may be a friendly, “hi, are you working today?” exchange before the fraudster asks for all Form W-2 information.

The IRS gave these examples of what appear to be e-mails from top executives at the organization:

• Kindly reply with all W-2s of our company staff for a quick review. I need them in PDF file type, and you can send it as an attachment.

• Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary)? Kindly prepare the lists for me asap.

The scam affected all types of employers last year, from small and large businesses to public schools and universities, hospitals, tribal governments and charities, the IRS said.
(more…)

New Scam Targeting HR & Payroll

A number of employers have recently fallen victim to a phishing scam that tricks them into disclosing highly sensitive employee information to unknown third parties. Make sure to warn your Human Resources and Payroll Departments to be on the alert so that your company doesn’t get added to the ranks of those swindled.

The Latest Scam

In the wake of tax season, multiple businesses have reported receiving spoofing emails, usually sent to Payroll and Human Resources departments / personnel. The emails appear to be requests from in-house high-level company executives, including in some instances the CEO, requesting that employee W-2 tax forms be transmitted to them for various administrative purposes. In reality, these emails are phishing expeditions sent by outside data thieves, who use cloned company email addresses with authentic-looking company logos, colors, and signatures.

If the recipients are deceived into thinking the emails are legitimate company correspondence, they will comply with the request and end up delivering W-2 forms to the scam artists. These forms contain a treasure trove of employee personal data, including Social Security numbers and other personally identifiable information. The successful hackers often use the data obtained from this phishing scam to file fraudulent tax returns on behalf of company employees.

You May Have Been Hacked And Don’t Even Know It

The IRS has reported a 400% increase in phishing and computer malware incidents this tax-filing season, and many companies that have been compromised still don’t realize it. In the coming weeks, as your employees attempt to file tax returns, you may learn that they are unable to file because someone else has already submitted a tax return on their behalf. The source of this data breach may be your company.

What You Should Do

You should immediately warn your employees about the risks associated with this new scam. You should specifically train your Payroll, Human Resources, and any other group of employees with access to personal identifiable information to be on the lookout for these phishing attempts or other red flags, such as requests for information not typically requested, or requests from individuals with whom the employees do not typically directly communicate. You should also take active security steps to ensure that personal data is only transmitted using secure methods.

If you believe your company is a victim of this scam, you may have a legal obligation to follow applicable data breach notification requirements. Besides determining your legal responsibilities, which vary from state to state, you should consider encouraging your employees to monitor their credit reports and take all of the usual measures to prevent identity theft. You should also suggest they file their tax returns as soon as possible in an effort to avoid the filing of fraudulent tax returns on their behalf.