Creative crooks have found a new way of using stolen identity details to defraud people - illegally applying for tax refunds.
The scam came to light when a Wellington professional, who doesn't want to be named, got a letter from police last week telling her she was one of five identity theft victims.
The fraudsters, looking for a way to access funds without immediate notice, registered with Christchurch-based company NZ Tax Refunds.
Known for its ''woo hoo'' television ads, the company allows customers to sign up online after entering a range of personal information. A tax agent then works with Internal Revenue to see if a refund is due, promising to let customers know within 60 seconds.
Inland Revenue insists agents have five pieces of personal information - all available on a driver's licence - and an IRD number. The information is then cross-checked against personal bank account details. In the Wellington case, the fraudsters used stolen information to apply for refunds, but used their own bank accounts, a discrepancy not picked up by NZ Tax Refunds' system.
Only two victims were due a refund, which NZ Tax Refunds processed and paid. The Wellington woman was one of those, and was left $1300 out of pocket. "One of the things about this is that you are not expecting to get the money," she said. "I wouldn't have followed it up if I hadn't been alerted to it."
The crime was discovered when the other person who had their refund stolen became impatient and contacted Inland Revenue. Checks revealed the claim had already been paid, and police were alerted.
The company said it picked up the other fraudulent claims within minutes of being notified by police, stressing it affected less than 0.01 per cent of its clients.
But how widespread such fraud is remains uncertain. An Inland Revenue spokesperson said information collected "does not specify cases of identity theft, as these cases fall under the broader category of tax fraud". Police list the crime under its broadest definitions, theft in the case of stolen identity, or fraud in the case of misappropriated funds.
The taxman has been vigilant around identity theft, repeatedly alerting the public to online scams by fraudsters impersonating the department who try to obtain personal information, but no mention has been made of where that information could be used.
One tax agent said that was probably an attempt to stop would-be criminals from finding out how they could exploit the system. He said agents often went the extra step of verifying if licence details were current or had been stolen, through credit checking agencies like Veda Advantage - as practised by NZ Tax Refunds. He declined to be more specific, to prevent "giving too much away".
The company refunded both clients and made system changes, and said while tax agents needed to be vigilant, the public did too. It advised not keeping all personal financial information in a wallet or purse, and being wary of online requests for private details.
The Wellington woman involved does not know how her information was stolen, and has been left considering locking her letterbox and being more circumspect about sharing details online. But she will remain a NZ Tax Refunds customer.
"They were appropriately concerned, and made assurances about how they would deal with my account if I were to remain. Still, I was quite surprised that it was so easy to sign up, and where this person was able to exploit the system."
Police are still investigating.
- © Fairfax NZ News
How would you rate your mathematical skill?Related story: Kiwi maths performance concerns