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Susan Tompor: Social Security benefits stolen by hackers, leaving families with bill

Susan Tompor, Detroit Free Press on

Published in Home and Consumer News

(You could get your tax refund before you even file -- but it's not a good thing. Read more about another tax scam here.)

Fraudsters developed a keen understanding of how to use the tax system to their advantage several years ago. So really, it should be no surprise if they prove to be adept at cracking into the weak spots in the Social Security system, too.

"Whoever is doing this clearly understands how the Social Security rules work," said Mary Beth Franklin, a nationally recognized expert on Social Security claiming strategies.

For example, a person who claims Social Security after full retirement age is eligible for up to six months of retroactive benefits, payable in a lump sum. If you accept that lump sum, your monthly benefit is smaller.

For the cyber crooks, the payout is huge if they use the ID of someone in that age range who isn't already collecting benefits.

"It's the biggest bang for the ID theft buck," Franklin said. She wrote in her column in Investment News that she has heard several stories from victims who are dealing with such problems, including contesting tax forms related to stolen Social Security benefits.

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James Shambo, who is a retired certified public accountant in Colorado Springs, Colo., received a Form SSA-1099 for $19,236 in Social Security benefits in January even though he never submitted an application for Social Security benefits. Shambo, 67, plans to collect at age 70.

Shambo received a letter from Social Security on Sept. 11 congratulating him for claiming benefits. But the money was disbursed as of Sept. 1, he said, so when he contacted Social Security the lump sum was already paid out. He said his benefits were deposited onto a prepaid debit card.

He questioned why he didn't get a letter before the money was paid out so he could alert the agency to the fraud.

"They said there's a task force in Washington working on this," Shambo said.


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