Each tax season, millions of folks get a large chunk of money. For many, this refund money is the largest lump sum they'll see all year.
A lot of those folks, however, don't have bank accounts. So they either get their Internal Revenue Service refunds in check form or they have the money loaded onto a prepaid card.
Reloadable prepaid cards are available from many tax preparation software programs. Or from tax preparation firms. Or from major retailers such as grocery, drug and big box stores. Just Google the term for myriad options.
But there's one big problem with these cards. Tax crooks absolutely love them
The cards essentially provide instantaneous monetization of the tax identity theft fraud, Scott Waddell, chief technology officer at iovation, told me.
Prepaid card refunds frozen: So the IRS and its private industry partners are taking increased steps to stop all types of tax identity theft and refund fraud. Earlier this filing season, those efforts led to thousands of prepaid card holders finding their cards frozen while tax and company officials confirmed that the card owners are the rightful refund recipients.
The intentions were good. Nobody wants crooks getting their or honest taxpayers' refunds on a prepaid card or any other way.
But the delay in loading tax refunds onto the prepaid cards caused problems for many of the cash-strapped taxpayers.
The card holders aren't alone. Waddell said that some clients of iovation, a Portland, Oregon-based firm that provides device intelligence for authentication and fraud prevention, are reporting that IRS security is slowing down their tax refunds.
It's not by much. But again, when you're waiting on tax money to cover car repairs or make rent, any delay is problematic.
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