Rs 500-cr call centre scam: The IRS calls that weren’t

Last Tuesday, the Thane police raided at least 9 call centres in Mumbai’s Mira Road area, arrested 70 people and booked 700 for allegedly perpetrating a Rs 500-crore scam on American tax payers.

Written by Khushboo Narayan | Published:October 11, 2016 12:47 am
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What is the Internal Revenue Service (IRS) Telephone Impersonation Scam?

According to US law enforcement agencies, in 2015, such phone deception involving American tax payers was the most frequent scam. Typically, the victims would get a phone call, usually during the tax filing season, and would be threatened with a tax investigation by imposters posing as IRS officers. They are told that if their tax dues are not cleared immediately, they could be in for trouble: charged for criminal violation, a grand jury indictment, immediate arrest, deportation or loss of a business or driver’s license. The victims are then forced to make an immediate payment, usually through pre-paid debit card, money order, wire transfer or gift cards. These scam calls typically involve a spoofed caller identification number to make the victims believe that the call is coming from the IRS headquarters in Washington. Sometimes, imposters also use IRS badge numbers to establish their identity.

How big is the problem for the US?

According to the US Treasury Inspector General for Tax Administration (TIGTA), as of December 2015, nearly 9,00,000 Americans have been targeted by scamsters impersonating as IRS officials. So far since 2013, over 8,800 Americans have lost at least $47 million to this scam, averaging more than $5,700 in losses per taxpayer in the US. According to J Russell George, Treasury Inspector General for Tax Administration, the IRS impersonation scam is “growing at an alarming rate” and “has hit taxpayers in every State in the country”.

How do scamsters choose their targets?

According to the TIGTA, immigrants and the elderly are easy targets. A 2015 report by the US Senate Special Committee on Ageing identified the IRS impersonation scam as the biggest financial fraud to hit the older American population. The annual financial loss to elderly victims of financial abuse in the US is estimated to be at least $2.9 billion, according to a 2011 MetLife study — Elder Financial Abuse.

So how do Indian call centres come into the picture?

Many of the complaints have been traced to call centres in India. Last Tuesday, the Thane police raided at least 9 call centres, booked 700 people and made 70 arrests on charges of cheating, extorting and impersonating under the Indian Penal Code and other relevant Acts. According to Indian investigators, these call centres made at least 100 calls a day to con people. Their executives would force victims to pay non-existent tax dues through gift cards of a specific brand or through wire transfers, allegedly making Rs 1.5 crore a day in this manner.

The call centre executives were given a six-page script to help them pose as IRS officers and extort money from victims. Once the executives, called ‘dialers’, net a potential victim, they would transfer the call to their supervisors, called ‘closers’, who negotiated the ‘fine’ and ended the conversation. The state police have also alleged hawala transactions by owners of the call centres.

Software industry experts and officials from the enforcement agencies feel that the absence of regulations to monitor BPOs, the high unemployment rate and slow conviction in criminal cases together have made India a hub for such activity.

Are there previous instances of IRS scams involving India?

While federal agencies in the US are aggressively pursuing IRS scams, until December 2015, the US Department of Justice had only prosecuted three individuals, all of Indian origin, for their roles in IRS impersonation scams. The US law enforcement agencies unearthed the first IRS impersonation scam in October 2013, arresting Pennsylvania-based Sahil Patel, 36, for running a massive IRS telephone impersonation scam through multiple call centres located in India. The agencies found that Patel, the “ringleader”, had duped hundreds of people of over Rs 6 crore between 2011 and 2013. Like the Thane call centre fraud, Patel used voice-over-internet-technology to extort money from victims. In July last year, Patel was sentenced to more than 14 years in jail at the Manhattan Federal Prison and fined $1 million. In September 2015, two Indians, Nikita Patel and Akash Satish Patel, were arrested in New Jersey for duping at least 70 people of $1,70,000 through the IRS impersonation scam. While Akash has been deported to India, Nikita is currently serving time in a US prison.