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Scammers target Californians' middle-class tax refund

Middle class tax refund debit card
Posted at 9:55 PM, Jan 19, 2023

SAN DIEGO (KGTV) — As millions of Californians receive their middle-class tax refund, some said their debit card was drained before they ever got a chance to use it.

Like so many others, ABC 10News photojournalist Michael Kenney was waiting for his refund. When he received it, it came in the form of a debit card. Kenney said he activated it, but he didn’t use the money right away.

When he tried to use the card two weeks later, he was denied. “Somebody had used the card, had taken the funds out in San Bernardino on a day that I was working in San Diego,” Kenney said.

He said most of the money was used at a Ross store and Del Taco.

So far, about 9.4 million Californians received the refund through a debit card, according to the Franchise Tax Board. Residents were issued cards instead of direct deposit for multiple reasons, including having a balance due from your taxes, filing a paper refund or a change in your banking information since your 2020 taxes were filed.

It is unclear how Kenney’s funds were taken, but so many cards equal numerous chances for cyber criminals.

“They’re getting really sophisticated, especially when you have groups targeting these government disbursement programs,” said Ronnie Rast with Independent Security Evaluators.

The FTB would not reveal how many complaints it has received regarding fraud, but a spokesperson would not give specific information. It sent Team 10 a statement that read:

“For security reasons, we are not discussing (by number or dollar amount) the exact level of fraud claims or cases being investigated as fraud. However, we have pointed out that under the terms of FTB’s contract with Money Network, the vendor handling the MCTR debit cards, the debit card program is expected to run with less than a 1% fraud rate. Currently Money Network reports that the fraud rate is well below that level.”

Team 10 was unsuccessful in reaching someone at Money Network to answer specific questions about the program and fraud claims.

Even at less than a 1% fraud rate, that still adds up to tens of thousands of people.

The FTB encourages people to transfer the money right away into your bank, but Rast recommends cashing it instead.

Consumers can do that through the Money Network Locator.

If you’re already a victim of fraud through these debit cards, Rast said you should change the password on your email and banking account out of an abundance of caution. He said you likely do not have to replace other debit or credit cards.

Kenney has filed a dispute. “I’m very disappointed with the state of California. They are losing so much money, taxpayer money, in this process,” he said.

If there’s a story you want Team 10 to investigate, email Team10@10News.com.