In 2024, there was a worrying jump in data breaches, leading to fears of increased tax fraud in 2025. A recent report from TransUnion highlighted that there were 970 breaches last year, putting about 640 million consumer records at risk. These records include sensitive information like Social Security numbers, addresses, and full names.
When personal information like this is exposed, it opens the door to fraud, such as filing fake tax returns or accessing bank accounts to steal tax refunds. Alarmingly, in the first half of 2024, 71% of breaches involved full Social Security numbers, up from 57% in 2023.
Greg Schlichter, a research and consulting director at TransUnion, stressed that the rise in data breaches has created major security gaps. He urged government agencies, banks, and individuals to stay alert to potential fraud.
Advice for Government Agencies
Fraudsters often target call centers to confirm stolen personal information or pretend to be victims. Call center staff should look out for suspicious activity, like calls that seem fake or those made through certain online services, even if they seem like normal inquiries about things like address changes or tax returns.
Cybercriminals might also use stolen information to access government websites to validate their info, file fraudulent tax returns, or intercept updates. To fight back, agencies are encouraged to adopt identity verification and document authentication technologies that can spot impersonators, including those using AI-generated fake IDs.
Naureen Ali, TransUnion’s U.S. head of fraud, pointed out that there are many tools available to help agencies prevent fraud. She suggested using call authentication and identity verification techniques to tackle attempts that involve stolen or fake identities.
Advice for Banks and Consumers
Banks should make sure that tax refunds are sent only to the rightful account holders. They should also examine new account openings carefully to catch any suspicious activity, such as accounts set up to hide fraud. Existing accounts should be protected from unauthorized access.
Consumers can protect themselves by regularly checking their bank statements and credit reports. When expecting tax refunds, it’s a good idea to frequently check their accounts to see if the money has arrived. Using credit monitoring services can also help alert people to any unauthorized accounts opened in their name.
The rise in data breaches means everyone needs to be more aware and take active steps to reduce the growing threat of tax fraud in the coming year.
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