Snapchat among companies duped in tax-fraud scam

SAN FRANCISCO - Tax-filing season is turning into a nightmare for thousands of employees whose companies have been duped by email fraudsters.

See Full Article

A major phishing scheme has tricked several major companies - among them, the messaging service Snapchat and disk-drive maker Seagate Technology - into relinquishing tax documents that exposed their workers' incomes, addresses and Social Security numbers.

The scam, which involved fake emails purportedly sent by top company officials, convinced the companies involved to send out W-2 tax forms that are ideal for identity theft. For instance, W-2 data can easily be used to file bogus tax returns and claim fraudulent refunds.

The embarrassing breakdowns have prompted employers to apologize and offer free credit monitoring to employees. Such measures, however, won't necessarily shield unwitting victims from the headaches that typically follow identity theft.

"This mistake was caused by human error and lack of vigilance, and could have been prevented," Seagate's chief financial officer, Dave Morton, wrote in a March 4 email to the company's employees about the breach.

The swindlers behind the tax scam are exploiting human gullibility rather than weaknesses in computer or Internet security. They have targeted company payroll and personnel departments, in many instances with emails claiming to be requests from the company CEO asking for copies of worker W-2s.

The schemes are so widespread that the IRS sent a March 1 notice alerting employers' payroll departments of the spoofing emails. The agency said the scheme has so far claimed "several victims," but declined Tuesday to disclose how many other employers had reported releasing W-2s to unauthorized parties. The IRS said it's seen a 400 per cent increase in phishing and computer malware incidents this tax-filing season.

The federal alert didn't come soon enough for Snapchat, which on Feb. 28 revealed that its payroll department had been duped by an email impersonating its CEO, Evan Spiegel. The Los Angeles company didn't specify how many employee W-2s it released. Snapchat didn't respond to requests for comment Tuesday.

"When something like this happens, all you can do is own up to your mistake, take care of the people affected, and learn from what went wrong," Snapchat wrote in a post on its corporate blog .

Seagate acknowledged surrendering the W-2s for all of its current and former employees who worked at the company last year. The Cupertino, California, company said "several thousand" people were affected, but declined to be more precise. As of July last year, Seagate employed about 52,000 workers but all but 10,500 of them were based in Asia.

Both Snapchat and Seagate notified federal authorities about the phishing attacks and are offering affected workers two years of free credit monitoring.

It's unclear how many other employers have been sucked into the tax scam. Hundreds of companies appear to have been targeted, according to Stu Sjouwerman, CEO of KnowBe4, a Florida company that trains employers to detect and avoid such scams.

Phishing attacks commonly occur during holidays and other annual events, such as tax season, to prey upon people's routines, said Farih Orhan, director of technology at security firm Comodo. The attacks are becoming increasingly effective because they rely on powers of persuasion instead of an attachment or link that might raise suspicion, said Ed Jennings, chief operating officer at email security company Mimecast.

"It's just like someone who convinces you to hand over $20 on the street," Jennings said.

Sjouwerman said the W-2 seeking attacks are most likely are being sent by Eastern European hacker groups planning to sell the information or claim fraudulent tax refunds.

The most effective phishing attacks use emails decked in company logos and colours to reduce the chances of detection, Orhan said. It's relatively easy for con artists to pose as a CEO online, since they can quickly fetch convincing details from a Google search or a perusal of professional networking service LinkedIn.

That doesn't excuse payroll or personnel departments who reflexively acquiesce to requests in apparently legitimate email, experts say. For instance, Sjouwerman said his firm's controller received a phishing email that, at first glance, appeared to be sent by him. But the email asked the controller to "kindly prepare" employees' W-2s, a phrase that he never uses. Company employees were alert enough not to send out the W-2s.

Even without a red flag like that, payroll and personnel specialists should be trained well enough to question why a CEO needs to see individual worker W-2s in the first place.

"It's a case of: 'Oh, the boss wants it'," Sjouwerman said. "They stop thinking, 'Why would this be?"'

-----

AP Technology Writer Brandon Bailey contributed to this report.



Advertisements

Latest Economic News

  • Home Capital director quits, citing potential conflict

    Economic CTV News
    TORONTO -- The chief executive of HOOPP has resigned as a director of Home Capital Group and its subsidiaries, citing a potential conflict of interest following the pension fund's decision to provide $2 billion of credit to the mortgage company. Source
  • German airlines to scrap requirement for 2 people in cockpit

    Economic CTV News
    BERLIN -- Germany's aviation association says the country's airlines have decide to scrap rules requiring two people in the cockpit at the same time, implemented after a Germanwings pilot is believed to have crashed his own plane in France two years ago. Source
  • Apple cuts off payments, Qualcomm slashes expectations

    Economic CTV News
    NEW YORK -- Qualcomm slashed its profit expectations Friday by as much as a third after saying that Apple is refusing to pay royalties on technology used in the iPhone. Its shares hit a low for 2017. Source
  • Canadian GDP flat in February after hot start to 2017

    Economic CTV News
    OTTAWA - Canadian economic growth took a pause in February after the break-neck pace seen at the start the year. Statistics Canada says gross domestic product was unchanged in February. The result matched the expectations of economists, according to Thomson Reuters. Source
  • Trump seeks to expand offshore drilling

    Economic CTV News
    WASHINGTON -- Working to dismantle his predecessor's environmental legacy, U.S. President Donald Trump plans to sign an executive order Friday that could lead to the expansion of drilling in the Arctic and Atlantic oceans. With one day left to rack up accomplishments before he reaches his 100th day in office, Trump will order his interior secretary to review an Obama-era plan that dictates which locations are open to offshore drilling, with the goal of the new administration to expand…
  • CEO of pension plan that gave lifeline to Home Capital resigns from board

    Economic CBC News
    The chief executive of HOOPP has resigned as a director of Home Capital Group and its subsidiaries, citing a potential conflict of interest following the pension fund's decision to provide $2 billion of credit to the mortgage company. Source
  • 'A real negative for Canada, no question': Experts weigh in on Trump's tax reform

    Economic CBC News
    A large corporate tax cut proposed by U.S. President Donald Trump must still get approval from Congress before it sees the light of day, but it could have impacts on Canada, economists say. On Wednesday, the Trump administration unveiled a tax revamp proposal that would reduce the top corporate tax rate from 35 per cent to 15 per cent. Source
  • Wealthsimple targeting older U.S. demographic, CEO says

    Economic CTV News
    TORONTO - Three months after expanding its millennial-targeted robo-adviser service to the United States, Wealthsimple is now seeking to capture an older demographic south of the border due to the burden of student loan debt there. Source
  • Ad boycott of YouTube could spell trouble for Google

    Economic CTV News
    SAN FRANCISCO -- YouTube's inability to keep big-brand ads off unsavoury videos is threatening to transform a rising star in Google's digital family into a problem child. It's not yet clear whether a recent ad boycott of YouTube will be short-lived or the start of a long-term shift away from the video service - one that could undercut Google's growth and that of its corporate parent, Alphabet Inc. Source
  • Uber exec running self-driving car division stepping aside due to lawsuit

    Economic CTV News
    SAN FRANCISCO -- The executive running Uber's self-driving car division is stepping aside while the company defends itself against charges that he provided the project with technology stolen from a Google spinoff. Anthony Levandowski, an autonomous vehicle expert who defected from Google last year, notified Uber's staff of his decision in a Thursday email. Source