this concludes our recession. [captioning performed by national captioning institute] http://twitter.com/cspanwj -- [captions copyright national cable satellite corp. 2013] >> budget committee paul ryan will lay out the budget plan for 2013. we'll have live coverage of congressman ryan and house republican leaders at 10:30 eastern here on c-span. and over on c-span 3, the director of national intelligence, the c.i.a. director and f.b.i. director will testify before the senate intelligence committee on global threats. live coverage at 10:00 a.m. eastern.

>> good morning washington enjoyed a long 50 year relationship with alexandria. by the time it was founded when he was 17, when he died at the age of 67, he participated in the political life of the city. he was a trustee of alexandria and he was a justice of the peace of fairfax county. he represented alexandria in the virginia legislator. even when he was president, he made sure when they chose this area to be the new site of the nation's capitol that alexandria was included in the original district of columbia. george washington loved to dance. and all the ladies really wanted to dance with him, to dance with the president of the united states was a big thrill. in 1798-1799, they came here for

birthday balls. he died in 1799, they had one every year, except for 1,800 because it was too close to his death and during the world war. alexandria has the largest george washington's birthday parade in the nation. alexandria likes to say this is george washington's hometown. >> next weekend, more from alexandria, virginia has book tv, american history tv and c-span's local content vehicles look behind the scenes at the history and literary life of alexandria, virginia. saturday at noon eastern on c-span 2 book tv and sunday at 5:00 on american history tv on c-span 3. >> when it comes to the secretary of state and the people around her, i think that what i found striking is her

ability to stay focused at all times, as much as possible, on what is happening. she doesn't get distracted by the details, if they're not important. obviously details often matter but she has an ability to stay focused on the big picture. how is what is happening in afghanistan impacting what they might be doing in the middle east. how is what is happening in the middle east impacting what they're trying to do in asia. i think she had a good sense of the big picture. of course she was surrounded by people who have helping her. i have to carry my own suitcase but she has staff and that allows her to stay focused on what really matters. she doesn't have to worry about whether lunch will be served or not. and when it aries, it will happen while she's thinking about the bigger picture.

>> now, a conference from the justice department's consumer protection summit. this panel from last week looks a unlawful practices of debt relief and collection agencies. >> good morning. the next panel is going to discuss several schemes that target consumers in financial distress, including debt schemes, phantom relief schemes and online payment schemes. there's real no common thread other than they do target consumers who are in financial distress, but for a small subset of consumers those looking for online pay day loans they could

run across all three of these issues. very briefly, my background then i'll introduce each of the panelists, discuss what they're going to be discussed, and we'll jump right into the panel discussion. i have been with the federal trade commission for over 20 years. i have done telemarketing fraud litigation. i have in the last 12 years been supervising federal court litigation dealing with all sorts of different types of scams, including mortgage release scams, debt relief scams, payday lending issues, as well as many other issues that deal with consumers who are in financial distress. first we're going to have jeff ehrlich. any consumer who is facing mounting, unsecured debt is looking for ways to lower that debt or try to settle that debt, there are a number of schemes out there that try to take advantage of these financially

distressed consumers. and jeff is going to talk about at least some of those types of schemes, and then i will pull out some of the other variations of that scheme. jeff currently is at the cfpb, he joined in july 2011. he is the assistant litigation deputy for failed litigation in the enforcement shop. before joining, jeff was a trial attorney at the u.s. department of justice where he defended the u.s. in tort litigation, including suits seeking to hold the government liable for losses resulting from hurricane katrina, as well as bernie madoff's ponzi scheme. before that he was an assistant county attorney for miami-dade county and he clerked for the honorable james lawrence king in the southern district of florida.

now, after jam, our attorney from the federal trade commission will discuss online payday lenders. i'd like to point out there is no national userry cap for pay day loans. la shawn will be focusing on a lot of issues that they're not concerned about, but focusing on how the loans are marketed. lashawn johnson works on a broad range of consumer credit and financial service issues, including challenging unfair, deceptive acts or practices by online payday lenders, and most recently she is focused on issues relating to the lending and debt collection practices of

online payday lenders affiliated with native american tribes. prior to joining the f.t.c. in 2003, lashawn was a litigation associate with the washington, d.c. firm, reached her b.a. with honors from howard university, graduated from the university berkeley school of law. and katie will discuss phantom debt collectors. these scams seem based overseas, for instance in india. call consumers and aggressively assert the consumers owe them for a payday loan. in most cases there is no real debt, or certainly these collectors have no authority to collect on whatever payday loan a consumer may have taken out. and so in fact really no more than shakedowns. katie also is an attorney with the f.t.c.'s division of financial practices.

she is working cases involved debt collection, unfair and deceptive contract under the f.t.c. act and fair lending laws. she came here first in 2006 after working at the law firm of wilmer hale and clerking in the eastern district of pennsylvania. jeff, i would like to first turn it over to you to talk about debt relief scams, and i think specifically you wanted to talk about the case that the cfpb brought. >> the case that i want to talk about is one of the first that the bureau brought in federal court last year. it was against an entity called payday loan debt solution. as the name some what implies, this was a company that reported to help consumers settle their payday loan debts that they could no longer afford to make payments on. i talk about this case because some of the characteristics that

were present in this case are common and are present in many debt relief schemes. and although there are different varieties and different levels of wrong doing involved, you know, some are outright scams, where these companies prey on people, they take money, never with an intent to provide any debt relief services. then there are others where companies do things that harm, that injury consumers, although it might not rise to the level of a flat-out fraud or scam. but they cause substantial harm to consumers. we identified this company as one that was injuring consumers, primarily through an advanced fee arrangement that it had. and again, this is a common practice, even after the f.t.c.'s amendment to the

marketing sales rule that banned this in debt relief, even after that, we still see where companies are charging these advanced fees. and often consumers are aware they're being charged advanced fees. part of that is a result of the way these companies do business. the model is like this. there's an internet presence, some sort of advertisement, so someone might go to the internet and they're having problems making payments on their payday loans, they might type in payday loan debt and a company like this pops up. the consumers would call the company and that begins a relationship. i want to say a word about these victims because it's something we heard earlier today. these are people who are bothered by the fact that they can't make payments on their debts.

there are people who have debts who don't care, who don't take action to solve the problems. the people who are most i guess vulnerable to something like this, are people who actually care about this. and then you also see a lot of the same things you heard earlier about victims of these types of arrangements are ashamed. they're ashamed that they've racked up a debt they can't afford to pay. and then they're ashamed again if they've fallen victim to unlawful practice. so these people who really take to heart they can't make these payments are looking for solutions, and unfortunately sometimes they find debt relief service providers who do not comply with the law. so, the first thing that these debt relief service providers often do is they tell the

consumers to stop paying their creditors. often they'll tell consumers they want the debt to ripen so the creditor is more ameanable to reducing the debt. so when consumers stop making payments on their debts, whether it's payday loan debt or unsecured credit card debt, there are consequences to that. and often these consumers find themselves hounded by their creditors. sometimes their debts are turned over to collectors, and they are subjected to harassment in the context of collecting that debt. and often consumers can't stand that anymore. so they try to drop out of a program that they have entered into anymore, which would be fine if the companies they were dealing with were complying with the f.t.c.'s rule. because the rules were meant to

alter the relationship between the companies and these consumers so the risk of not completing a program would fall on the company, not the consumer. a consumer should be able to enter into these arrangements and drop out at any time and receive a refund of all the money that they've contributed to their debt relief program. and walk away unharmed. when a company has a fee, it's up to the consumer to complete the program. when the consumer cannot complete the program, they lose money they paid in the form of fees to the debt relief service provider. and of course that upsets the whole incentive, if companies are abiding by the advanced fee ban, they have incentives only to enroll consumers who will complete the program, because they will only be paid when the consumers debts are resolved.

if they are permitted to take advanced fees, or they do, once they collect the fees that they're due under the arrangement, they would rather not perform any work, and so once they've collected their fee, and there's nothing more to get from the consumer, the incentive is for them to have the consumer drop out of the program. so you find that with these advanced fees are present, you have often situations where consumers are enrolled in programs that they have no hope of completing. that's particularly true with credit card debt. often the debt relief programs that consumers enroll in take three years or four years to complete. and consumers may or may not be told that when they enroll in these programs. but if they enroll in a program that takes four years to

complete, and every month they're sending money to a debt relief company, or to a payment processor that is acting between the consumer and the debt relief company, if they can't complete the program, and they're being charged advanced fees, they're going to be harmed. that was the case we found with payday loan debt solution. it was a company that had been charging advanced fees. hundreds of the consumers that it was dealing with had had no debt relief services provided whatsoever. and yet they had paid thousands of dollars in fees in some cases. and so we were able to obtain restitution for those consumers.

they have done a good job bringing action against them where they're not intended to do any work for consumers, they're taking very large sums of money, especially from consumers who have very high credit card debts, and that's a very common scheme or unlawful act that you see in this area. but, this model of signing up consumers for programs that they largely can't afford, and that sometimes provide no benefit than is also still a problem, even after the amendments to the rule. >> jeff, one of the things i've learned while working at the f.t.c. is that often times a successful scam will take a colonel of truth and expand on it. the colonel of truth here is that there are credit card companies that will negotiate

down a debt, correct? >> there are some. yes. >> so, how can a consumer, when they're hearing this and they've heard on the radio or seen on the internet, they've heard that this does happen, how are they going to be able to recognize a company that is legitimately offering what they really can do versus somebody who may be further along the broad spectrum as you were just discussing? >> well, the first thing that a consumer can do is contact his or her own creditor, right. you can call your own credit card company and explain that you're having problems making payments. and you can attempt yourself to obtain a payment plan, or some arrangement that will allow you to resolve your debt, or at least make progress towards resolving your debt without obtaining the services of a debt relief service provider. beyond that, there are red flags that i think that if consumers were aware of they might be able

to avoid these unscrupulous providers. the advanced fee. any time a debt relief service provider tells a consumer that you have to pay a fee up front, that should be a red flag because that's unlawful under the t.s.r., and ought to be a clue to consumers to stay away from that company. there's a lot of information available publicly on the internet. consumers can go to the internet, do google searches for companies they're looking to do business with and you'll often find some of the worst players in this field will come up and people will voice their complaints on the internet and consumers can find that if they look. a lot of states regulate this, and require licenses for debt relief service providers. so, consumers come up to their

state agencies that regulate debt relief service providers to learn whether there are complaints about particular companies, and payday loan debt solution that i talked about, we partnered with five states who brought parallel claims to our advanced fee claim asserting violations of their state laws. they were state licensing laws, these were companies that were doing businesses with consumers in various states but had no licenses in those states. be respect to a couple of states, they were violating state laws. so consumers can also check with their states. if a debt relief service provider makes a guarantee about a type of relief it can get, or you know someone says i'll be able to reduce your debt by 30%, 40%, 60%, they can't make guarantees like that, because as you point out, some creditors will deal with debt relief

providers, others will not. some will not compromise the amount that a consumer owes a creditor. so that should be a red flag to consumers. >> thanks. we could spend another hour on debt relief scams, but we have a lot to cover. i want to move onto lashawn johnson who will talk about online payday lending and some of the consumer protection issues with regard of how these are being marketed and kind of what happens after a consumer has taken out an online payday loan. >> yeah. well, what happens when consumers can't pay their debts, i'm going to talk about the process of what happens when consumers take these payday loans online. typically it seems as if it's great, we all shop online. so instead of going to a store front these particular individuals will go online and search for payday loans and get a whole list of different entities that come up. so sitting at their house or

whereever they are with their rap top they can put in their information and tell them how much money they want to loan, have loaned to them and it can be in a day or two, you'll have that money automatically depositted into your account. from that point of view, life seems great. however, the nightmare begins to the point when they actually accept that loan, and what the f.t.c. has done recently is brought a number of cases that target the practices that occur in the lending process, and the debt collection of a loan. so typically what happens once the consumer gets the loan, terms they weren't aware of, or they get to the point where they can't pay the loan, they learn that the actual payday lender will use debt collection practices that violate the law. in 2010 the f.t.c. brought a case against loan point for their deceptive pracks for their debt collection activities.

and what loan point was doing was using federal government forms that federal agencies can use to garnish wages without a court order. they would use these forms and send them out to consumer employees and tell them they owed a debt and based upon the debt collection act they could garnish the wages out of that court order. unfortunately, smaller companies , they have actually -- and there are perhaps larger companies who may have told them no and they moved on. at the same time now the harm is actually done. you have a consumer here who the reason they couldn't take out a loan more than likely is because they couldn't make their means in terms of their own income. now they're further in the hole because unscrupulous entities decided to garnish their wagers.

the wage garnishment was actually not valid. they used a a clause which didn't comply with federal law. so we went after them for these federal violations. so after that case of loan point, we brought another case in 2011 against p.t. financial for similar problems. they decided to associate itself with someone who was a tribal member. the owner for the defendants belong to a nationally recognized tribe, but the corporate enities that he actually used to offer payday loans were incorporated by the state. so they are state entities. although he hasn't raised this argument with the federal government, in state actions he's arguing the states can't go after them because he's entitled to tribal sovereign immunity.

what happened here, this particular entity said tribal law authorizes us to garnish consumer wages who of course don't live on a reservation, don't even live in a state where the company is operating but lives in another state based upon tribal law. and of course that wasn't necessarily true so we brought an action against them. they also were requiring consumers through the electronic signature when they signed up for the loan to sign up for a preauthorized recurring payment. in order to get the loan you have to give permission to go to the bank account. that violates the law. you can't condition credit on someone agreeing to take these automatic withdrawals. the other things that were so different from loan point is they decided because there were some particular employers who weren't honoring the garnishing wages were actually suing the consumers in tribal court. so the f.t.c. brought a

complaint to stop that because a tribal court is of limits jurisdiction and they don't have subject matter jurisdiction because they've never been to the reservation, they trans acted the business over the phone and there's no right for the tribal court to actually defend this action. that particular case is still pending. it's at the summary judgment stage. at loan point we actually got summary judgment on that, although they have appeal that matters. the last case we brought was in 2012 against a & g services. these cases start to evolve, they are actually allegedly owned by entities that are chartered by a nationally recognized native american tribe. and what a & g services is doing they're not disclosing to the consumer how much they're going to have to pay back and the repayment terms. basically what happens is a

consumer takes out a loan, they tell them it will be the amount of the loan, plus unspecified fee, they're going to take that amount on certain days, say when ever the consumer's next paycheck is. what happens when that time comes, instead of taking the full amount that they will pay back, they will take out the interest in fees and sort of roll over the loans. they're extending the credit where the consumer is never paying on the principle, they're basically paying that interest. so the loan becomes substantially more expensive for the consumer than it initially was. another thing they are doing in terms of their debt collection is that they have been threatening consumers, that they would sue them or go after them for criminally, if they didn't pay their debt, and interestingly after we brought that count, they said oh it's not us, that's some phantom debt collector which my colleague katie will talk about. the thing we want consumers to be aware of is that the wage garnishment is an issue, like

the consumer wages should not be garnished unless there is is court order. we want to know if you're looking to take out a loan, you should be able, the particular entity should tell you sort of clearly what those terms would be, and so you have a full expectation of what's going on. and they shouldn't be able to disclose your debt to a third party which is the employee, or anyone else or use a level of harassment to collect the debt. even though you've taken out the loan, you've got into a tight spot, the consumer has rights. and we want to protect those rights as it relates to federal law. >> so, two questions. one is what happens if a consumer receives a garnishment notice from one of these tribes? >> as a first step, they can go talk to their h.r. department, and try to talk to them about the fact that this is not attached to a court order, it's basically one private employer

saying to another private employer your employee owes me a debt, pay me. and if that ultimately doesn't resolve your issue, then you may have to get a lawyer. this will make this process very expensive to sort of protect your rights. but that is an option they can do. of course we want to know about it. so let the f.t.c. know through our complaint system so we can be aware of what the different entities are doing. >> and you can file a compliant with the f.t.c. calling 1-877-ftc help. >> thanks for helping. >> i know this number off the top of my head. or you can go online to www.ftc.gov and there's an online complaint form where you can fill out the information. what are some of the other red flags that consumers should be looking at? especially on the front end of deciding if they want to take out an online payday loan? >> i will admit that most of these loans are totally unreadable but you should be able to tell from what ever

information they've given you on the website, like how much money is it going to cost you, the total cost and how are you going to pay it back. so if you can't figure that out from reading it, that's probably a red flag there's something hidden there that's not very clear to you. certainly what i mentioned before about the rollover issue, you're never going to be paying the principle, just the interest in fees and will continue to carry this debt over and over. another thing is if you see the words wage assignment if your loan agreement, or the fact that that the entity is representing they are affiliated with a native american tribe or owned by a nayity american tribe, that could certainly limit what state action can be taken on your behalf. also, idealy, if you can't take out these loans, you want to be able to do, as jeff mentioned, a very simple internet search. you'll be amazed at how many complaints are out there, or you can call the b.b.b., or your state attorney general's office

or the attorney general's office where the actual entity is located. and you will learn of their complaints. just be pro active on the front end, can save you a lot of arm in the end. >> thank you. now, i'd like to use the segue that you have keyed up to move onto katie who is going to talk about some of the phantom debt collectors. in many cases, but not always, are trying to collect on alleged payday loans. >> yes, as riley said earlier, they are scam artists really that are either individuals or companies that contact consumers in order to collect money that the consumers either do not owe, or that the scam artist have no authority upon which to collect. and there are two cases that the f.t.c. brought last year that illustrate the i grieges practices that these fraudsters are engaging in.

one of them, in this situation, it was consumers who had either previously taken out payday loans or had either just applied for payday loans or just inquired about payday loans. and they were contacted by callers who would sometimes have foreign accents, sometimes claim to be law enforcement officials who were going to come with a warrant and arrest them and take them to jail because they owed this money. and unless people paid they would be arrested and put in jail. one consumer in particular was threatened, the wife received a call, she was told there was a warrant out for the husband, that they knew where he worked. but they were on their way to pick him up at work and arrest him and unless they paid money, then he would be arrested and put in jail forever. they also allege lawsuits, they use abusive language. it's very egregious, and the one

thing, these are consumers that perhaps previously are behind on debts. they could have taken out a payday loan before, that they have paid off, but they're confused, they don't really know but when they have a caller that continues to harass them every day, every night, threatens to arrest them, they think maybe if i pay it will go away. so consumers have paid between 200 to thousands of dollars to settle these debts. again, these are consumers already in financial distress. they don't have money that's laying around to pay. and also these are debts that perhaps if there is outstanding debt, the consumers can pay not being paid to legit creditors. the complaint we brought alleged misrepresentation, they were falsely representing they were collecting on debt, also violations to the f.t.c. last year in october, the federal court entered a settlement agreement and a

permment injust against american credit crunchers and a $5.4 million judgment. the agreement also included a ban against debt collection for this particularly entity. the one thing is these are not just, they might be fly by night but they could also be very large operations. and another case that the f.t.c. brought against broadway global masters is an example of this. in this case, the f.t.c. charged that the defendants scheme actually involved more than 2.7 million calls to over 600,000 different phone numbers. and that in less than two years, the defendants fraudulently collected more than $5.2 million from consumers. this is money these consumers did not owe, and were threatened and harassed into paying. this also sometimes involves criminal behavior, and the c.e.o. of the company was actually charged with 21 criminal counts of wire and mail fraud in this particular debt

collection scam. and even though some of these, the allegations and the complaints that have been brought involve people who have applied for payday loans, or who have inquired about payday loans, it doesn't necessarily involve always payday loans. there are sometimes when it's old credit card debt that people are being harassed about. other type of debt, people calling saying they have been committed check fraud. it's definitely really just a shakedown scam that is involving people who are in our economic times have suffered some setbacks financially. and one thing that is pretty consistent, they are persistent, these scammers, but they also do have some consistent methods. and consumers can be on the look out for them and know exactly there's something fishy about what's happening. the caller could be a fake debt collector if they're seeking a

payment on a debt that you don't really remember or recognize. it is hard because often, you know, you might have a debt from a long time ago that you think you might not owe or didn't know you owed. but if you don't recognize the debt, that's a very big red flag. they refuse to give you a mailing address and phone number, or the address sounds fake. they might very well make up a mailing address, but if it sounds like it's fishy or false, then that's another red flag. if they ask you for personal or financial banking information, don't give it. sometimes they have it, which is also disconcerting. if a caller calls you up and has your social security number and bank account number it makes you seem more legitimate. but if they're asking you for that information, don't give it. if they start to exert really high pressure tactics, such as threatening arrest, saying that they're going to get you fired,

that's definitely a red flag. and what should you do though if you're a consumer and you actually think the person on the phone is a fake debt collector? one thing you should do is collect all the information they are willing to give you then report it to the f.t.c. at the toll free number of 77-ftc-help. what phone number they're giving you to call back to make any payment, what their names are, what the names are they're using for the company, what the mailing address is. any type of information they're willing to give you or if you have caller i.d., the number they are calling from. anything that you can get will definitely be helpful if you want to file a complaint. tell the caller that you refuse to discuss any debt until you get a written validation notice. now the notice has to include the amount of the debt, the name of the creditor you owe and the rights under. if the caller says no, we're not going to send it to you, that's a red flagget that this is not a legitimate debt collector.

you can stop speaking to the caller. if you have an address, you send with a return receipt that you keep a copy of and tell them you are discontinuing any communication with that caller and a debt collector has to stop unless they're calling you to say they are filing a lawsuit against you. or to tell you they will no longer be calling you again. contact your creditor to see if it's legitimate that this is a debt collector working with your creditor. and also report the call to the f.t.c. >> how are they getting this information? because you said sometimes they have an awful lot of information on you. >> well, that's a very good question, and that's something we're actually very interested in finding out more of. we have -- we think there could be some people that are trading

for people's personal information. but we are interested in finding out more of who these phantom debt collectors are and where they're getting their leads from. >> you have said? some cases the callers had foreign accents. what if the caller doesn't have a foreign accent? does that mean it's a legitimate debt? >> no. there are more and more of these fandom debt scams popping up everywhere. it is definitely a growing cottage industry. even if a caller does not have a foreign accent, obviously the two cases that we brought, the call centers were located abroad. however, even if they don't have, there are many consume ers who have complained and it definitely seems to be a widespread call centers are located everywhere. >> are these scams just calling the consumers? or are they calling parents or siblings or children, relatives?

>> because they may be collecting on very, very old debt often they are calling very old numbers. could be ex wives, could be old addresses, tracking down folks. so definitely, and one of the things is, if they do get a relative, threatening the relative that the grandson is going to be arrested is another way in order to collect money from people. so again, the same advice sort of applies. that if a parent or relative receives information or receives a call from somebody who is threatening, having personal information that might be outdated, definitely take as much information down but don't pay anything. because the debt, if it does exist won't go away then. >> i'd like to thank everyone on the panel. i think we're like one minute early, but that's never a bad thing. i'd like to thank each and every one of you for joining us today

and talking about the various scams that you have been working on. unfortunately, it keeps us employed. thank you very much. >> more now from the consumers protection summit. this next panel looks at tax schemes run by companies during tax season. >> thanks for hanging in there everybody. we're almost done, one more panel to go. so, i love the month of march. we got spring training has begun. march madness is about to start. spring is around the corner. tax season is here. well, of course with tax season comes a lot of fraud scams and our next panel is happy to tell you all about it and hopefully

arm consumers with additional information that they can watch out for to avoid becoming victims of common tax fraud schemes. with us today we have carol, she's a counsel in the tax division of the department of justice. and robert, the acting director in the global financial crime section in the internal revenue service criminal investigation division. so thank you, why don't you begin, tell us what to watch out for. >> ok, well, i think what most taxpayers are and should be aware of are two different types of scams that might be perpetrated on them during tax season. the first is something that happens without their knowledge, their identities stolen and tax return is filed in their name and they have no idea that happens until they try to file a tax return or they get some kind of notice from the i.r.s. that something is going on with their account that they don't feel

they had reason to even file. the second one is situations where taxpayers have entrusted their information to a professional, a paid tax preparer, and sometimes they're taken advantage of. this is a very small minority of instances but once, in either situation whether someone steals your information or there's a return prepare involved, it's a very hard situation to try to rectify. we're here to try to talk about some of those. the most important one, the one that's received the most press of late is identity theft. through a number of avenues, taxpayers, individual, private, personal identifying information is stolen, and information is used to file a tax return. vast majority they have no idea

that it's been compromised or filed in their name. as soon as the filing season opens up, the fraudsters in this case, they know when we start processing returns, they know they have stolen information and they try to get that information into our situation as soon as possible. >> robert, where is it you're seeing the bad guys stealing the debtities the most? >> i couldn't talk about where they're seeing it the most, but any place where you would deliver up your name, your address, your social security number, it can be stolen. we have seen from health care institutions, car dealerships, financial institutions. we've even seen it stolen from lawyers' offices. so it's very difficult in a process to just prepare your own tax return and file it. but once somebody's done that for you, and you have no idea,

how do you find out about it? the i.r.s. may issue you a notice saying we got a tax return and we have some questions on it. you may be trying to file your own return after the fact, and you'll get a notice from the i.r.s. that says we already have a return in your name. you might start getting a notice that you owe additional money on your tax return. you might get a notice from either a federal or state or local benefit agency saying hey, we're going to start -- your benefits because the i.r.s. has said you did that. irregardless of how you're told about it, the best thing you can do is contact the i.r.s. we have a special unit, the need for protection specialized unit, which deals soly with these

types of instances. and there is an 800 number, 1-800-908-4490 where you can call and report that information. if you've been given notice by the i.r.s. that your information has been stolen, it will give you complete instructions on how to work through the process to advise the i.r.s. of the correct information that should have been on your tax return and how to, in a sense, correct your accounts. >> robert, i understand a lot of these scammers are using prepaid cards in order to help their scheme. they're stealing customer identities, getting the fraudulent refunds and asking the treasury department to load these funds, refund onto these prepaid cards. is that something you've been aware of or you've done anything? >> oh, yeah. we've seen the refunds loaded onto prepaid cards.

they've even resorted to the old fashioned method of cashing a treasury check. all of those are valid ways to receive your refund. it's an option the taxpayer has to receive their refund in any of those manners, so the fraudsters use any of those means that they can to get the cash in their hand. really that's their whole objective. this is just another income stream for them, another fraud scam they can run and get money that they really didn't earn. >> and that is just generally one of the concerns we have, about the mobile payments, emerging payment mechanisms making the flow of money much easier, much more anonymous than it's ever been before and something we're paying attention. thank you robert. carol? >> i was just going to add on the enforcement ad which is

where the department of justice comes in, we have had a number of prosecutions of individuals that have been convicted of stolen identity refund fraud. there's been a stolen identity, they've used it to get a tax refund, or multiple tax refund to which they're not entitled to. some of those prosecutions have received sentences, ranging anywhere from a year to over 10 years. identity theft, as a crime has a very, very high sentence. and these individuals don't just steal, in general. they don't just steal one or two identities and file one or two tax returns. what we are seeing and what's being vigorously prosecuted are individuals or groups of individuals that do hundreds and hundreds of these. so, each taxpayer is injured to the tune of a couple of thousand dollars, which is certainly

significant, but the perpetrators are getting refunds of hundreds of thousands of dollars. so when they're prosecuted, each instance of identity theft is a hefty sentence. so those are multiplied. >> as a matter of fact, carol, sorry to interrupt, but it carries with it a mandatory minimum sentence of two years. that is very significant to have a mandatory minimum sentence in a white collar crime. >> right. so a lot of these individuals that have these schemes going, the months add up very, very quickly when they are sentenced. in addition though, to criminally prosecuting people who are stealing identities then committing tax refund crimes, what the department of justice also does on the civil enforcement side is tries to find these people and shut them down. whether they are tax return preparers, you know, your

regular corner tax return preparer who may occasionally do a legitimate turn. if they're also doing illegitimate tax returns, the i.r.s. and the department of justice can shut them down with a sil injunction. over the last 10 years, the department of justice has enjoined over 500 bad return preparers, some of whom also combine their poor tax return preparation services with identity theft, and refund crime. and they can be shutdown on the department of justice website, there are a number of press releases. that's a good resource. if you think your return preparer is doing something shady or you're not sure, you want to see if you're allowed to prepare returns, you can look on the department of justice website and look for tax division press releases, injunctions and you can see whether the person is under an injunction to stop doing that. so we're sort of hitting this

from two tax in terms of enforcement. we have the prosecutions which have hefty prison sentences, and a hefty restitution component. but we also have stopping the practice. robert, one of the things i wanted to ask and let me step on your toes there, mike. what can a consumer do? what can a taxpayer do once their identity is stolen, they think they're enteetled to a refund but it's already been paid out? >> again, you can contact the i.r.s. directly at the identity protection specialty unit with the number i mentioned, they will walk you through the process and getting you your legitimate refund if you are in fact due one. i have to caution everyone that because the account is wrapped up in this scam, it's not going to be the normal two week turn around we do for refunds. it's going to take at this

point, the height of the filing system, it might take three, four, five months. that is down from what it has been in the past years. the i.r.s. has signed over 3,000 personnel to work these types of cases, and to fix taxpayers accounts and get them the money that they are entitled, the refund they're entitled to get. if you find that that procession is not moving forward for you, and you're having a financial hardship that you can't get around because of that, additional resource within the i.r.s. that you can go to is something called the taxpayer advocate service, within the i.r.s., and you can contact them directly as well, that's an 877 number, 877-777-4778. and they can help kind of cut the red tape if you're having a hardship in that situation.

but, unfortunately, because you're dealing with trying to unravel a fraud scheme and we want to make sure once we've been scammed we're not scammed again. because that happens. they do in fact use the same mechanisms, the fraudsters do that the public does to try to determine where's their refund? or hey, my address has changed. use those legitimate tools that a taxpayer can use to try and gain the system. it does take a while to sort that out, unfortunately. but there is a mechanism and it will get resolved. once you are identified as a victim of identity theft, the i.r.s. is assigning you something called an identity pin, or an i.p. pin. and what that does is now the i.r.s. systems will be tagged that in order to file a tax return in the future, you'll have a pin number every year that the i.r.s. will notify what that is in advance of filing season, so that you will confirm

not only the information that's on the tax return but you'll confirm with information that the i.r.s. has already sent you, just like a bank a.t.m. if you will. >> before we wrap up, you want to mention the dirty dozen, or at least pick out a couple that you think ought to be mentioned and at least reference it? >> sure, sure. each year the i.r.s. puts out a dozen tax schemes that the public should be aware of. these are schemes that generally are perpetrated on people trying to comply with the tax system, and enterprising fraudsters figure out how to prey on the taxpayer. we've talked a little bit about return preparers, and basically what you want to know there is no matter who you pay to help with your tax return, what's on your tax return is the taxpayers responsibility, so always get a

copy of the return, sign only a completed return. go to a return preparer that's rep table. you can check with consumer agencies, or if they're a professional like a c.p.a. or tax attorney, you can check with the state associations. when you pay a tax return preparer, their fees should be based upon the complexity, not a percentage of the refund. and in any circumstance, the return preparer that your refund should not be coming from a return prepayer but from the i.r.s. >> let me jump in here. my favorite website as a d. o.j. attorney representing the internal revenue service is www.irs.gov. it's like number one on my bookmarks. and all of this information on i.d. theft, the specialization unit and tips for choosing a good tax return preparer, as

well as all 12 of this year's dirty dozen schemes are on that website, and i commend it to you for your pe rusal. some of the other schemes that aren't necessarily perpetrated on consumers, but that consumers can get sucked into are schemes to hide your money offshore, to create yourself as a church. to file zero returns, or basically tax defier constitutional kind of arguments. other things for free money. those are things to watch out for. you know the old saying, if it seems too good to be true, follow that. >> carol, i'd like to identify one more, and it's a common scheme that's not focused solely

on the i.r.s., but fishing schemes, where the fraudsters try and contact you through social media and get your personal information, because they're portraying themselves as the i.r.s. the i.r.s. does not initiate taxpayer content by email. and if you get an email from someone that looks like it's the i.r.s. and you have not been in contact with them through the mails, previously, again you can go to i.r.s. point gov and there's an email address where you can forward that email. a lot of time those schemes are coming from offshore because once your information is out there, even that information is valuable to fraudsters to sell amongst themselves. but the big key is buyers do not initiate contact with taxpayers through email. >> thank you both very much. i appreciate it. >> you're welcome. >> thank you. >> and thank you all again for attending. that wraps up our second annual

consumer protection supplement. thank you again to georgetown university. natalia, thank you so much for all the hard work you did in putting this event together. i do want to make one last plug for a website. i love the i.r.s. website too, but my favorite is the task force website, stopfraud.gov. i.r.s. is a close second. thank you all very much. and hope to see you next year. thank you.

>> on c-span this morning, budget committee chairman paul ryan will lay out the house g.o.p. 2014 budget plan. he's joined by other house republicans at the capitol live at 10:30 eastern. over on c-span 2, the senate will work on a measure to fund the federal government for the rest of the fiscal year. the senate gavels in at 10:00 eastern. and on c-span 3, the senate intelligence committee will hear from the new head of the c.i.a., john brennan, and f.b.i. director robert muller. they'll testify about global threats, live at 10:00 eastern. and coming up in 45 minutes --