The myGov scam every small business owner should be aware of

Imagine logging into your myGov account and discovering that your activity statements for the past 12 months have been amended, leading to GST credits of $100,000 being issued. The problem? You didn’t make those changes or receive a $100,000 refund in your bank account. Welcome to the world of tax fraud scams, where your identity is stolen, and your financial stability is put at risk.

In this blog post, we will explore the mechanics of these scams, how they infiltrate your myGov account, and what you can do to protect yourself. Whether you're a small business owner, freelancer, or independent contractor, understanding these threats is crucial to safeguarding your financial future.

The rise of tax fraud scams

Tax fraud scams are becoming increasingly common, with scammers accessing myGov accounts for their rich source of personal data. Once inside, they change bank account details and use the personal information to generate fraudulent refunds worth hundreds of thousands of dollars. The worst part? You probably gave the scammers access to your account unknowingly.

The scale of the problem

It's not just activity statements that are targeted. Any myGov-linked service capable of issuing refunds or payments is a potential victim. Scammers exploit amendment periods in tax law to adjust existing data and trigger refunds on personal income tax, sole trader tax payments, goods and services tax (GST), and pay as you go (PAYG) instalments. Their knowledge of Australia's small business taxes and social security systems is often alarmingly sophisticated.

How the scam works

Once scammers gain access to your myGov account, they can inflict significant damage. But how do they get in, and why is this scam so pervasive? The answer lies in human vulnerability.

Common tactics used by scammers

Scammers often employ emails (78.9% of reported tax-related scams in the last 12 months) or SMS (18.4% of reported scams) that mimic official communication. Here are the common lines of attack:

• Fake warnings: emails that claim there have been attempted attacks on your account, requiring you to click a link and confirm your details.
• Opportunistic baiting: messages flagging a tax refund that you need to click a link to confirm and access.
• Mimicking administrative notifications: fake messages from the Australian Taxation Office (ATO) about new messages accessible from a link.

Approximately 75% of all email scams reported to the ATO to March 2024 were linked to a fake myGov sign-in page.

How to spot a fake

Recognising a scam can be tricky, but there are tell-tale signs:

• Hyperlinks in messages: The ATO, Centrelink, and myGov don’t use hyperlinks in their messages. If you receive a message with a link, it's a fake.
• QR codes: The ATO will not use QR codes as a method for you to access your account.
• Requests for sensitive information: The ATO will never ask for your tax file number (TFN), bank account details, or myGov login details over social media.
• Pre-recorded messages: The ATO does not use pre-recorded messages to alert you to outstanding tax debt or to cancel your TFN.
• Conference calls: The ATO will not initiate conference calls between you, your tax agent, and someone from law enforcement.

Always log into your myGov account directly to check any details alerted in messages rather than clicking on links. This way, you know you are not being redirected to a fake site. And, never log into your myGov account on free Wi-Fi networks.

Who is getting scammed?

Contrary to popular belief, it's not just older, less tech-savvy individuals who are at risk. The ATO reports that the demographic most frequently providing personal information to scammers is 25 to 34-year-olds. Younger generations are also more likely to fall for investment scams. In the 2023-24 financial year, Australians reported losing $382 million to investment scams, nearly half involving cryptocurrency.

Other types of scams

Scammers are versatile and will exploit any opportunity to part you from your money. Here are a few other scams to be aware of:

Investment scams

Investment scams promise high returns with little risk. "Pig butchering" is a tactic where scammers build a close relationship with victims over weeks or months before encouraging them to invest in fake platforms. Victims believe they are trading on legitimate sites, but the money is siphoned into accounts owned by scammers.

Deepfake scams

Deepfake technology creates lifelike impersonations of real people. Scammers use video ads, images, and news articles featuring celebrities or trusted public figures to promote fake investment schemes. These can appear on social media feeds or be sent through messaging apps. While unusual pauses, odd pitches, or mismatched facial movements can be giveaways, increasingly sophisticated deepfakes are becoming harder to spot.

Invoice scams

Scammers use the names and details of legitimate businesses to issue fake invoices. Often tied to cyber breaches, these scams involve hackers accessing your systems and identifying your suppliers.

Bank scams

People often receive phone calls purporting to be from their bank, advising of problems with their account. Scammers then walk them through transferring money into a 'safe' account. Banks will never send emails or text messages asking for account or financial details. Always contact your bank directly if you receive such a message.

What to do if you have been scammed

If you suspect you've fallen victim to a scam, immediate action is crucial.

myGov scams

If you've downloaded a fake myGov app, provided your details to a scammer, or clicked on a suspicious link, contact the Services Australia Scams and Identity Theft Helpdesk at 1800 941 126, or get help with a scam here.

Tax scams

Before acting on any instructions, contact us to verify the information. If you've already taken action, verify or report the scam to the ATO at 1800 008 540. The government sometimes uses external agencies like Recoveriescorp for debt collection, but you will be informed if you have an outstanding tax debt.

Protecting yourself against scams

Here are some steps you can take to protect yourself:

• Stay informed: Regularly update yourself on the latest scam tactics.
• Use strong passwords: Ensure your myGov account and other sensitive accounts have strong, unique passwords.
• Enable two-factor authentication: Add an extra layer of security to your accounts.
• Be sceptical: Always question unsolicited messages asking for personal information.
• Contact authorities: If in doubt, reach out to the relevant authorities to verify any suspicious communication.

Conclusion

Tax fraud scams are a growing threat to small business owners, freelancers, and independent contractors. By understanding how these scams operate and taking proactive steps to protect your information, you can safeguard your financial future. Learn more about Small Business Taxes and stay vigilant, stay informed, and never hesitate to verify any suspicious activity with the appropriate authorities.