Attacks/Breaches
4/5/2017
10:50 AM
Connect Directly
Twitter
LinkedIn
Google+
RSS
E-Mail
50%
50%

Businesses Hit by More W-2 Fraud as Cybercriminals Shift Tax Season Targets

Businesses, not individuals, are more frequently targeted with scams as cybercriminals try to cash in on tax season.

Every year, cybercriminals cash in on tax season by targeting individuals, but this year it's a little different. It's businesses that must be extra careful when filing, because businesses are experiencing a rise in tax-related scams, specifically W-2 fraud.

Researchers at IBM X-Force, the tech giant's security research division, discovered more than 1400% growth in general tax-themed spam between December 2016 and March 2017.

"On top of all the usual activity -- consumer tax fraud, filing on others' behalf -- we began to see that businesses are being targeted a lot more," says Limor Kessem, executive security advisor for IBM Security.

In the past, she says, tax fraud on businesses were the purview of only advanced attackers. This year, they saw a rise in social engineering attacks on smaller organizations like schools, non-profits, and restaurants as fraudsters start to aim for the "low-hanging fruit" of the corporate world.

Cybercriminals often collect W-2 data by pretending to be a company exec and emailing HR or payroll for employee information, which is used to file fraudulent returns and collect refunds. In addition, they may also request a wire transfer to a specific bank account.

Attackers who are more technically inclined may bypass the fake emails and breach an organization's servers to steal data directly, says Kessem.

In addition to using W-2 data for their own scams, fraudsters will sell it on the dark web, the report states. The most valuable bundles of information are called "Fullz" and contain the victim's address, contact info, Social Security and driver's license numbers, plus all W-2 and W-9 information. Each record runs for $40-$50 in Bitcoin on the Dark Web.

With all this data for $50 per record, harmful activity doesn't have to stop at tax fraud, Kessem notes. Cybercriminals can buy and use this data for other scams like identity theft or online loan applications.

Tax-related risks increase as the filing deadline approaches. One-third of Americans (54 million people) filed their taxes after April 1 in 2016, giving fraudsters a larger window of opportunity to strike. Tax-related cybercrime won't stop after April 18, 2017.

"There are a number of people filing after the deadline," says Kessem, noting the popularity of extensions. "Criminals don't have to stop then. There are millions who will still be interested in tax-themed emails."

However, their tax scam strategies will shift after the deadline as cybercriminals move from stealing data to infecting machines with malware. Because victims may expect messages indicating problems with their returns, they are more likely to open potentially malicious attachments, Kessem explains.

Researchers believe data sets sold on the Dark Web are a sign that fraudsters are stealing tax info from employer databases -- meaning they get it before the taxpayers. Here are a few steps consumers and businesses can take to protect themselves:

  • Don't delay: File as soon as you receive the paperwork. It can take a while to discover if your data has been compromised. Waiting gives cybercriminals more time to use your information.
  • Ask for verification: Phishing attacks often pretend to come from popular tax filing software vendors. If you plan to file your own taxes online, access the vendor's site directly, and don't click links or open attachments in vendor messages.
  • Don't answer online requests: Fake IRS-themed emails use logos and subject lines to trick taxpayers into responding. The IRS never contacts taxpayers via email, text message, or social media to ask for personal data, so don't reply to requests through these channels.
  • Get an IP PIN: Set up an Identity Protection PIN (IP PIN), which is a 6-digit number the IRS gives to taxpayers to prevent the misuse of their Social Security number on fraudulent tax returns. Check your eligibility here.  

Related Content:

Kelly Sheridan is Associate Editor at Dark Reading. She started her career in business tech journalism at Insurance & Technology and most recently reported for InformationWeek, where she covered Microsoft and business IT. Sheridan earned her BA at Villanova University. View Full Bio

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Register for Dark Reading Newsletters
White Papers
Video
Cartoon Contest
Write a Caption, Win a Starbucks Card! Click Here
Latest Comment: just wondering...Thanx
Current Issue
Security Operations and IT Operations: Finding the Path to Collaboration
A wide gulf has emerged between SOC and NOC teams that's keeping both of them from assuring the confidentiality, integrity, and availability of IT systems. Here's how experts think it should be bridged.
Flash Poll
New Best Practices for Secure App Development
New Best Practices for Secure App Development
The transition from DevOps to SecDevOps is combining with the move toward cloud computing to create new challenges - and new opportunities - for the information security team. Download this report, to learn about the new best practices for secure application development.
Slideshows
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2017-0290
Published: 2017-05-09
NScript in mpengine in Microsoft Malware Protection Engine with Engine Version before 1.1.13704.0, as used in Windows Defender and other products, allows remote attackers to execute arbitrary code or cause a denial of service (type confusion and application crash) via crafted JavaScript code within ...

CVE-2016-10369
Published: 2017-05-08
unixsocket.c in lxterminal through 0.3.0 insecurely uses /tmp for a socket file, allowing a local user to cause a denial of service (preventing terminal launch), or possibly have other impact (bypassing terminal access control).

CVE-2016-8202
Published: 2017-05-08
A privilege escalation vulnerability in Brocade Fibre Channel SAN products running Brocade Fabric OS (FOS) releases earlier than v7.4.1d and v8.0.1b could allow an authenticated attacker to elevate the privileges of user accounts accessing the system via command line interface. With affected version...

CVE-2016-8209
Published: 2017-05-08
Improper checks for unusual or exceptional conditions in Brocade NetIron 05.8.00 and later releases up to and including 06.1.00, when the Management Module is continuously scanned on port 22, may allow attackers to cause a denial of service (crash and reload) of the management module.

CVE-2017-0890
Published: 2017-05-08
Nextcloud Server before 11.0.3 is vulnerable to an inadequate escaping leading to a XSS vulnerability in the search module. To be exploitable a user has to write or paste malicious content into the search dialogue.

Dark Reading Radio
Archived Dark Reading Radio
In past years, security researchers have discovered ways to hack cars, medical devices, automated teller machines, and many other targets. Dark Reading Executive Editor Kelly Jackson Higgins hosts researcher Samy Kamkar and Levi Gundert, vice president of threat intelligence at Recorded Future, to discuss some of 2016's most unusual and creative hacks by white hats, and what these new vulnerabilities might mean for the coming year.