60 Minutes Skewers ‘Gov’t Bureaucracy’ on Tax Refund Fraud; Highlights Role of Prepaid (Sept. 23, 2014)
If you were watching 60 Minutes on Sunday night, your heart probably stopped during the story on “The Tax Refund Scam.” The story highlights findings in the GAO’s new report, which says tax refund fraud costs U.S. taxpayers $5.2 billion—largely because, in the words of the IRS Commissioner John Koskinen, the government, despite advances, is still in the “late 19th century” regarding its ability to verify the identity of tax refund recipients. Halfway through the piece, prepaid cards are introduced as a way for fraudsters to receive the proceeds of illegally obtained refunds. Commissioner Koskinen characterizes prepaid cards as the “currency of criminals” and makes a number of inaccurate claims about their nature, even mentioning prepaid cards used to deliver Social Security benefits. As you might expect, the 60 Minutes story fails to mention the prepaid industry’s significant work with law enforcement to stem the use of prepaid cards in tax refund scams.
Paybefore calls this reporting to your attention to highlight how the repetition of certain not-fact-based allegations continues and how the allegations have the potential to harm the reputation of prepaid, unfairly influencing legislators and regulators, consumer groups and would-be users of prepaid products.
The industry remains challenged by misperceptions, and we encourage all industry members—individually and collectively—to continue educating legislators, regulators and consumer groups of the significant fraud safeguards built into prepaid and the lack of anonymity of reloadable products. And those of us who are U.S. taxpayers should be cognizant of the need to modernize the tax refund system (addressing the cause of the fraud), and encourage our government officials to look at many of the systems and methods payments networks use in their funds disbursement functions, which the story acknowledges are superior to government’s.