Tax Fraud Tops List of Consumer Complaints - But There’s Plenty More To Fret About

NEW YORK (MainStreet) -- Identity theft, specifically related to tax fraud, tops a new list of U.S. consumer financial complaints.

But there are plenty of additional worries on the list to keep law enforcement officials and consumers on the edge of their seats, according to the Consumer Federation of America's Top Ten Consumer Complaints List.

I.D. theft vexes consumers most, the survey reports. "Considering the epidemic of data breaches that we've been experiencing in the last year, it's not surprising that more consumers are contacting state or local consumer agencies for help to resolve the problems that identity theft can cause," notes Susan Grant, director of consumer protection and privacy at the CFA.

Better education is the best way to combat the tax fraud side of identity theft, says Amber Capoun, president of the North American Consumer Protection Investigators, which co-sponsored the study. "Government benefits fraud resulting from identity theft makes it very difficult for the victims to claim benefits that are rightfully theirs," noted Amber.

"The solution to the problem isn't to provide consumers with identity theft insurance, it's to require better security to prevent their personal information from being stolen and fraudulently used," adds Grant.

Consumer advocates says the IRS is highly aware of potential consumer fraud issues, but identity thieves still seem to have the upper hand. "I've heard from alarmingly more victims of tax I.D. theft this year than any other year," says Robert Siciliano, an identity theft expert at BestIDTheftCompanys.com. "The issue stems from the fact that the I.R.S. bases their authentication on the honor system. Further, the honor system to a degree is used when making write-offs, too. The system needs a serious upgrade."

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