[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
DECEPTIVE MAILING CONCERNING TAX REFUNDS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON OVERSIGHT
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
JULY 19, 2001
__________
Serial No. 107-37
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
74-525 DTP WASHINGTON : 2001
_______________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing
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COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California
AMO HOUGHTON, New York WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa JOHN LEWIS, Georgia
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania XAVIER BECERRA, California
WES WATKINS, Oklahoma KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
Allison Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Oversight
AMO HOUGHTON, New York, Chairman
ROB PORTMAN, Ohio WILLIAM J. COYNE, Pennsylvania
JERRY WELLER, Illinois MICHAEL R. McNULTY, New York
KENNY C. HULSHOF, Missouri JOHN LEWIS, Georgia
SCOTT McINNIS, Colorado KAREN L. THURMAN, Florida
MARK FOLEY, Florida EARL POMEROY, North Dakota
SAM JOHNSON, Texas
JENNIFER DUNN, Washington
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C O N T E N T S
__________
Page
Advisory of July 12, 2001, announcing the hearing................ 2
WITNESSES
Internal Revenue Service, Robert E. Wenzel, Deputy Commissioner.. 6
U.S. Postal Inspection Service, Lawrence E. Maxwell, Inspector in
Charge, Fraud, Child Exploitation and Asset Forfeiture Division 8
______
SUBMISSION FOR THE RECORD
Ohio Office of the Attorney General, Hon. Betty D. Montgomery,
statement...................................................... 19
DECEPTIVE MAILING CONCERNING TAX REFUNDS
----------
THURSDAY, JULY 19, 2001
House of Representatives,
Committee on Ways and Means,
Subcommittee on Oversight,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:00 p.m., in
room B-318, Rayburn House Office Building, Hon. Amo Houghton
[Chairman of the Subcommittee] presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON OVERSIGHT
CONTACT: (202) 225-7601
FOR IMMEDIATE RELEASE
July 12, 2001
No. OV-6
Houghton Hearing on
Deceptive Mailing Concerning Tax Refunds
Congressman Amo Houghton (R-NY), Chairman, Subcommittee on
Oversight of the Committee on Ways and Means, today announced that the
Subcommittee will hold a hearing to investigate recent reports of a
deceptive mailing. Unsuspecting taxpayers are being solicited by a
group, calling itself the Revenue Resource Center, that is attempting
to convince taxpayers to pay approximately $15 to receive a fact sheet
that purports to outline the amount of their upcoming U.S. Department
of the Treasury refund check. The hearing will take place on Thursday,
July 19, 2001, in B-318 Rayburn House Office Building, beginning at
2:00 p.m.
Oral testimony at this hearing will be from invited witnesses only.
However, any individual or organization not scheduled for an oral
appearance may submit a written statement for consideration by the
Committee and for inclusion in the printed record of the hearing.
BACKGROUND:
The Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L.
107-16) directs the U.S. Treasury Department to send checks to most
taxpayers beginning later this summer as an advance payment to reflect
the new 10 percent tax bracket.
However, there have been recent reports of unscrupulous entities
hoping to take advantage of taxpayers who may want further details
about their eligibility for this tax refund payment. Taxpayers in at
least five States have received postcards designated as ``2001 Form 16-
B,'' resembling an official Internal Revenue Service (IRS) tax form,
and bearing the designation, ``Revenue Resource Center,'' a ``Non-
Partisan Bureaucratic Agency.'' The postcard offers to send information
on the amount of the recipient's tax refund check in exchange for
$14.95. The postcard, which may be easily confused with official IRS
correspondence because of its use of certain terms, typeface, and a
quotation attributed to President Bush, requests money ``in order to
identify the amount of the tax credit you are scheduled to receive.''
In announcing the hearing, Chairman Houghton stated: ``Everyone
should be on guard against deceptive mailings that attempt to look like
they come from the government and are trying to sell a service the
government provides for free. We have to let people know that if they
receive this postcard, they should ignore it.'' In passing the tax
relief bill, Congress anticipated questions about these payments, and
directed the Treasury Department to send taxpayers a letter telling
them the specific information they need to know about their tax refund
check. Taxpayers can learn further details about their refund by
checking the Internal Revenue Service web site, www.irs.gov.
FOCUS OF THE HEARING:
The hearing will highlight the deceptive mailing being sent to
individuals and the way taxpayers can find legitimate information about
the tax payment checks they may soon receive.
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Means, U.S. House of Representatives, 1102 Longworth House Office
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Chairman Houghton. All right. The meeting will come to
order. So now, on behalf of Mr. Coyne and myself, I welcome
everybody here, and I thank you very much for your presence. I
am just going to say a word or two, and then I will turn it
over to Mr. Coyne, and then we will have the testimony.
Just a few words: The hearing today focuses on a very
deceptive mailing and trying to take advantage of unsuspecting
taxpayers. It happens all the time, but it is particularly
egregious now, and these mailings attempt to deceive taxpayers
that prey upon the will of law-abiding citizens, often by just
plain misrepresenting what a government agency says, such as
the Internal Revenue Service (IRS).
And as we will really put a fine point on for this hearing,
in recent reports, as you know, about a deceptive mailing
associated with the tax rebate checks soon to be issued by the
Treasury Department.
The mailing, in the form of a double-sided postcard
displayed in front of me--and displayed in front of me right
over there--has been sent to taxpayers in at least six States
from an entity called the Revenue Resource Center. That sounds
pretty authentic, doesn't it?
[The opening statement of Chairman Houghton follows:]
Opening Statement of the Hon. Amo Houghton, M.C., New York, and
Chairman, Subcommittee on Oversight
Good afternoon. Today's hearing focuses on a deceptive mailing that
is designed to take advantage of unsuspecting taxpayers. These mailings
attempt to deceive taxpayers and prey upon the good will of law-abiding
citizens, often by misrepresenting a government agency, such as the
IRS, as we will see at this hearing.
Recent reports have surfaced about a deceptive mailing associated
with the tax cut rebate checks soon to be issued by the Treasury
Department. The mailing, in a form of a double-sided postcard,
displayed in front of me, has been sent to taxpayers in at least six
states from an entity called the Revenue Resource Center.
Now, at first glance, this looks like an official Internal Revenue
Service document, with terms like ``Form 16-D--Taxpayer Refund Relief
Information Worksheet,'' ``Bureaucratic Agency,'' ``Taxpayer Activity
Report,'' and a quote from President Bush citing the need for tax
relief.
The card asks taxpayers to send in $14.95 for a fact sheet about
their upcoming Treasury Department refund check. And, I think the card
uses a very suspect tactic when it says the recipient should return the
card ``to assure proper delivery.'' Some people might think this means
that they must ``send in $14.95 to assure proper delivery of their
refund check.''
Today, with the assistance of the Internal Revenue Service, the
U.S. Postal Service, and through the work of state consumer protection
agencies, like the one headed by Ohio Attorney General Betty
Montgomery--we will expose this fraud.
We will hear from two witnesses to answers some important questions
and help us get to the bottom of this deceptive mailing.
Through this hearing, I hope the public will learn to be on guard
against deceptive mailings.
I am pleased to yield to our ranking Democrat, Mr. Coyne.
Chairman Houghton. Now, at first glance, this looks like an
official Internal Revenue Service document with terms like
``Form 16-D,'' ``Taxpayer Refund and Relief Information
Worksheet,'' ``Bureaucratic Agency,'' ``Taxpayer Activity
Report,'' and then a quote from President Bush citing the need
for tax relief.
Now, the card asks taxpayers to send in $14.95 for a fact
sheet about their upcoming Treasury Department refund check,
and I think the card uses a very suspect tactic when it says
the recipient should return the card to ``assure proper
delivery,'' quote, unquote. Some people might think this must
mean that they send in $14.95 to ``assure proper delivery'' of
their refund check.
So today, with the assistance of the Internal Revenue
Service, the U.S. Postal Service and the work of State consumer
protection agencies, like the one headed by Ohio Attorney
General, Betty Montgomery, we are going to expose this fraud;
and we will hear from two witnesses to answer some of the
important questions and help us get to the bottom of this
deceptive mailing.
So through this hearing, I hope the public will soon learn
to be on guard, not only about this, but also other deceptive
mailings. So what I am pleased to do now is to yield the floor
to our ranking Democrat, Mr. Coyne.
Mr. Coyne. Thank you, Mr. Chairman. The tax laws are
complicated enough, as we know, without having scam artists
preying on the public with misleading tax information and
offers to provide, for a fee, completely unnecessary tax
assistance. I am pleased that the Oversight Subcommittee under
the leadership of Mr. Houghton is holding today's hearing on
the most recently discovered tax scam. I hope that we learn
from today's testimony that this scam has been shut down.
Taxpayers nationwide are beginning to get their letters
from the IRS concerning the amount of their upcoming tax
rebates. The rebate program was designed to be very simple, as
today's hearing will confirm; and taxpayers don't need to do
anything to get their rebate.
Mailings from anyone offering to help in this process for a
fee should be considered a fraud and should be forwarded to the
Treasury Inspector General's office, or the IRS.
I want to thank Chairman Houghton for quickly scheduling
this hearing from the information that has been brought to our
attention, to see if we can't get to the bottom of it.
Thank you.
[The opening statement of Mr. Coyne follows:]
Opening Statement of the Hon. William J. Coyne, M.C., Pennsylvania
The tax laws are complicated enough without having scam artists
preying on the public with misleading tax information and offers to
provide--for a fee--completely unnecessary tax assistance.
I am pleased that the Oversight Subcommittee is holding today's
hearing on the most recently discovered tax scam. I hope that we learn
from today's testimony that the scam has been shut down and that the
perpetrator is under criminal investigation.
Taxpayers nationwide are beginning to get their letters from the
IRS concerning the amount of their upcoming tax rebates and the process
for receiving them. The rebate program was designed to be very simple--
as today's hearing will confirm, taxpayers don't need to do anything.
Mailings from anyone offering to help in this process for a fee
should be considered a fraud and should be turned over to the Treasury
Inspector General's Office or the IRS immediately.
I urge that the Subcommittee continue to investigate tax scams as
they surface. Finally, I want to thank Chairman Houghton for quickly
scheduling this hearing.
Chairman Houghton. Okay. Thank you, Mr. Coyne.
I have got to say something about Mr. Coyne. One of the
nice things about being on this Subcommittee is that I really
do think we work in a bipartisan way, because there are a lot
of people who claim they do, but--you can hear the bugles, but
you don't see the horses coming over the hills. But we really,
I think, do the best we possibly can. So I am delighted to join
with Mr. Coyne in this.
The two program members, just let me introduce you. You
don't need any introduction for yourself, but I think for the
rest of the people here: Mr. Robert E. ``Bob'' Wenzel, who is
the Deputy Commissioner of the Internal Revenue Service; and
then Larry Maxwell, Inspector in Charge of Fraud, Child
Exploitation and Asset Forfeiture Division, United States
Postal Service.
And so would you begin the testimony, please, Mr. Wenzel.
STATEMENT OF ROBERT E. WENZEL, DEPUTY COMMISSIONER, INTERNAL
REVENUE SERVICE
Mr. Wenzel. Thank you, Mr. Chairman. We welcome the
opportunity to testify before this Subcommittee about the
recent attempt to lure taxpayers into needlessly paying for
information about their advance payment checks. The IRS is
providing the information free of charge to all taxpayers in a
series of mailings that began just this past Saturday. We fully
share the Subcommittee's concern and outrage about this
contemptible effort to prey upon unsuspecting taxpayers, and
applaud your efforts, Mr. Chairman, in exposing such
unscrupulous activity through this hearing.
The IRS appreciates the help offered by you, the Department
of Treasury, and many other interested parties who are able to
raise public awareness about this serious problem. We have
placed an alert on the front page of our Web site and certainly
welcome any other suggestions you might have.
We are concerned about all fraudulent schemes and
solicitations, particularly those such as mail or wire fraud
that rise to the level of criminal activities. While we do not
have independent jurisdiction to investigate mail and wire
fraud, we work continuously with the appropriate Federal law
enforcement agencies that have such authority to help ensure
that any such conduct is addressed.
Mr. Chairman, long before this scam appeared, we
anticipated that there would be enormous interest in the
advance payments. We took immediate steps before and directly
following the enactment of the Economic Growth and Tax Relief
Reconciliation Act to help taxpayers understand the process and
to provide them with legitimate free information.
On May 31st, we inserted a general announcement before the
prompts on our toll-free telephone lines. Our representatives
on the toll-free telephone lines were also provided helpful
scripts and answers to frequently asked questions so they could
better assist taxpayers.
And even as the bill was being signed by our President on
June 7th, we began issuing a nationwide press release and
accompanying fact sheets with details about the advance payment
checks. In the release, we told taxpayers that we were working
together to make this process as simple as possible. We
informed them that they would receive a letter describing the
check amount and identifying the week it would be sent.
We also committed to sending a letter of explanation for
taxpayers who would not be eligible to receive the advance
payment. And at the same time, we posted information on the IRS
Web site that we call the ``Digital Daily'' about the advance
payment checks and the advance payments process.
Beginning June 27th, taxpayers calling on the toll-free
telephone lines were able to automatically receive information
both on eligibility for the advance payments, as well as about
the check mail-out schedule; and we have made this information
available to taxpayers in both English and Spanish.
The IRS and its employees have worked very hard to get the
message out about the checks. Throughout our communications, we
emphasized that taxpayers did not need to call us, fill out any
special forms or do anything else to receive the check.
Mr. Chairman, as you are aware, of the 112 million advance
payment notices printed, approximately one-half of 1 percent,
or approximately 500,000 notices, contained incorrect
information concerning the amount of the check that taxpayers
would receive. This was a human and not a systemic error.
I would like to stress, Mr. Chairman, that the error was
detected very quickly and corrected prior to the printing of
the checks. Taxpayers will receive a check for the correct
amount.
We apologize for any confusion the incorrect notices may
have caused, and in order to reduce that confusion, the IRS is
sending corrected notices to the affected taxpayers.
In conclusion, Mr. Chairman, we want to do all we can to
ensure that taxpayers do not fall prey to solicitation schemes.
One of the best ways to accomplish this is by providing
taxpayers with specific information about when they may expect
their checks and how much they may expect to receive in their
advance payment checks. The IRS will continue to provide this
information through a variety of channels, and we look forward
to working with you and the Subcommittee to combat this type of
problem now and in the future.
Thank you, and I would be happy to answer any questions.
[The prepared statement of Mr. Wenzel follows:]
Statement of Robert E. Wenzel, Deputy Commissioner, Internal Revenue
Service
Mr. Chairman, I welcome this opportunity to testify on the recent
attempt to lure taxpayers into needlessly paying for information about
their advance payment checks. The IRS will provide this information
free of charge to all taxpayers in a series of mailings that began on
Saturday.
I fully share the subcommittee's concern and outrage about this
brazen attempt to prey upon unsuspecting taxpayers. And I applaud your
efforts, Mr. Chairman, to expose this unscrupulous activity through
this hearing. As Justice Brandeis often remarked, ``Sunshine is the
best disinfectant.'' We will work with you, the Department of Treasury
and all interested parties to help raise public awareness about the
problem. We have placed an alert on our web site and we certainly would
welcome any suggestions you might have.
The IRS is concerned about any scheme or fraudulent solicitations,
particularly those that might rise to the level of criminal activities,
such as mail or wire fraud. While the IRS does not have independent
jurisdiction to investigate mail and wire fraud, we will work with the
appropriate federal law enforcement agencies that do, such as the
Postal Service, to ensure that any such conduct is addressed.
Mr. Chairman, long before this scam appeared, we anticipated that
there would be enormous interest in the payments. We took great steps
before and immediately following enactment of the Economic Growth and
Tax Relief Reconciliation Act of 2001 to help taxpayers understand the
process and to provide them legitimate and free information through a
variety of channels.
After passage of the conference report to the legislation, we began
to receive taxpayer calls. On May 31, 2001, in response to these calls,
we provided on our toll-free lines the following general announcement
before the prompts: ``If you are calling about the recently passed tax
refund, there is nothing you need to do to receive this check. The
Internal Revenue Service will send you a letter by the middle of July
telling you the amount of the check you will receive and when you will
get it. The IRS will begin mailing these checks by the third week in
July. Please note all payments will be made by check and direct deposit
is not available. Again, there is nothing that you need to do to get
the check.'' Our representatives on the toll-free telephone lines were
also provided helpful scripts and answers to frequently-asked-questions
to assist taxpayers.
As the President was signing the bill on June 7, IRS'
Communications and Liaison Division began issuing a nationwide press
release and accompanying fact sheets with the details of the advance
payments checks. In the release, we stated that the IRS wanted to make
this process as simple as possible. Taxpayers would receive a letter
describing the check amount and the week it would be sent. We would
also send a letter of explanation for taxpayers not eligible for the
advance payment.
We emphasized throughout our communications that taxpayers did not
need to call, fill out special forms or do anything else to receive the
check. Commissioner Rossotti was quoted as saying, ``All you need to do
is open your mailbox. We'll take care of everything else. You don't
need to do anything else to receive the check.''
By our calculations, as of July 6, IRS staff across the nation
answered 168 media inquiries, initiated nearly 400 media contacts to
interest reporters to cover the story and participated in almost 370
interviews with television, radio and print reporters. It was front-
page news or the lead story for many broadcasts.
IRS National Public Liaison also shared the fact sheets and
releases with their key practitioner contacts. The Government Liaison
Division staff in the field began briefing state tax administrator and
local congressional offices using the prepared materials. At the same
time, we posted on the IRS web site, the Digital Daily, a cover story
on the advance payment checks as well as a special page on the advance
payments.
On June 27, taxpayers calling on the toll-free telephone lines were
able to automatically receive information both on eligibility for the
advance payments as well as the check mail-out schedule. The
information is available in both English and Spanish. Clearly, we have
worked very hard to get the message out about the checks.
Mr. Chairman, as the subcommittee is aware, of the 112 million
advanced payments notices printed, approximately half of one-percent or
500 thousand, contained incorrect information on the amount of the
check taxpayers would receive. The incorrect information was the result
of human error that failed to limit, in some cases, the tax relief
amount. This was not an error in our systems. In order to reduce the
confusion, the IRS will send corrected notice as soon as possible to
the affected taxpayers. Let me stress, Mr. Chairman, that the error was
quickly detected and corrected prior to any information being sent to
FMS for the printing of checks. Taxpayers will receive a check for the
correct amount. We apologize for any confusion the incorrect notices
caused.
Mr. Chairman, in conclusion, we want to ensure that taxpayers do
not fall prey to the solicitation schemes. One of the best ways to
attack this problem is by providing taxpayers with the specific
information they need about their advance payment checks. Therefore,
the IRS will continue to provide this information through a variety of
channels and we look forward to working with you and the Subcommittee
to address this problem. Thank you and I would be happy to answer any
questions you have.
Chairman Houghton. Well, thanks very much, Mr. Wenzel. I am
sure we will ask questions, but let us go to Mr. Maxwell's
testimony first.
STATEMENT OF LAWRENCE E. MAXWELL, INSPECTOR IN CHARGE, FRAUD,
CHILD EXPLOITATION AND ASSET FORFEITURE DIVISION, U.S. POSTAL
INSPECTION SERVICE
Mr. Maxwell. Thank you, Mr. Chairman, Mr. Coyne, and my
thanks to the Subcommittee for inviting us here.
Briefly, the Postal Inspection Service is the law
enforcement arm of the Postal Service. We have been around
since the beginning of the Postal Service, for about 200 years.
We have two primary weapons in the war against fraud, the
mail fraud statute, which I refer to as the granddaddy of all
consumer fraud protest statutes, that was enacted in 1872; and
we also have a civil remedy, false representation, under Title
39, 3005, and that was amended by Congress last year--enhanced,
I should say--through the Deceptive Mail Prevention and
Enforcement Act, which has been a tremendous boon to us. And,
in fact, in this particular instance, I would call this case
the ``the poster boy for fraud opportunities,'' because of how
it fits a government look-alike.
Following Mr. Wenzel, I will say--I will restrict my
remarks primarily to the investigation of this mailing and what
happened here; and I should say, first up, that IRS does have
their own excellent Criminal Investigation Division, but as Mr.
Wenzel said, this fraud falls beautifully within the Inspection
Service's statutes. I should point out we have worked very
closely together over the many years.
This is the actual postcard. As you see, it is a postcard
and that is the blowup of it. It is a First Class postcard,
very authentic, looks like a nice government mail piece.
You probably have heard of the movie shown last year, ``The
Perfect Storm,'' and the book. If there was ever a scene set
for the perfect fraud scheme, I would say this was it. You have
a very good thing happening, that is, anticipation of a refund
check. The public is aware; they know what is coming. And then
in the midst of this, you have an opportunist jumping in with
an offer that you have to pay to get the information, which is
actually available free.
That, in and of itself, is a violation under the Deceptive
Mails Act, and that is what we focused on.
Thanks to a Member of your staff, Mr. Walder, sitting
behind you, who is familiar with our agency, we were alerted to
the card and the promotion before we even received a complaint.
And that is not uncommon, that in instances like this where it
seems like a legitimate operation, that we do not receive the
complaints until people have actually paid money. And that is
the sad part of fraud, because you can prevent it if you can
intercept it beforehand.
Arresting people, prosecuting people is excellent; it is a
good enforcement tool, preventive measures. But it is better to
prevent victimization if we can, and this is a beautiful case
of it.
When Mr. Walder referred it to us, we were able to take
swift action by filing a false representation order--a
complaint, actually, for false representation order. It is on
file now with our law department, and that was filed on July
16th. We were able to also withhold the mail, which at the time
was only literally a handful of pieces that came in, so we are
very lucky to have minimized the number of victims, I think, in
this case.
Interestingly, though, the operator learned of our
intervention, and this is very typical, then moved to another
address location. And if you notice on the address, Revenue
Resource Center, it has the designation on the second line at
the end, PMB. PMB stands for ``private mailbox,'' and that is a
new regulation that the Postal Service just put out last year
for commercial mail receiving agencies, and it was to mirror
the----
Chairman Houghton. Where is that?
Mr. Maxwell. It is on the address at the bottom of the
card, at the very bottom left corner.
Chairman Houghton. Oh.
Mr. Maxwell. And that is for ``private mailbox.''
What we did when we worked with the commercial mail
receiving industry on making the regulations, it was so that
the public would have a means to know that this is not a
physical address; this is a commercial mail receiving agency.
It helps us in fraud prevention. That was what we were hoping,
that at least the public would know who they were mailing their
money to, and if it was a P.O. Box, it would say a P.O. Box, so
they could explore whether they want to send their money to
this location or not.
The promoters in this case did open another address in the
Northeast, in the Boston area, which we just became aware of.
We are in the process of amending our complaint now to include
that address.
And there is a potential here, based on some of the claims
made, where there could possibly be criminal violations here
for mail fraud.
So I am here, and I am happy to answer any questions for
the Subcommittee. Thank you very much.
[The prepared statement of Mr. Maxwell follows:]
Statement of Lawrence E. Maxwell, Inspector in Charge, Fraud, Child
Exploitation and Asset Forfeiture Division, U.S. Postal Inspection
Service
Thank you Chairman Houghton, Congressman Coyne and other Members of
the Subcommittee for the opportunity to testify today.
The U.S. Postal Inspection Service is responsible for protecting
postal employees, the mails and postal facilities from criminal attack,
and for protecting consumers from being victimized by fraudulent
schemes or other crimes involving the mails.
In the last Congress the ``Deceptive Mail Prevention and
Enforcement Act'' was passed by Congress and signed into law by the
President. This law provided new disclosures to be made on certain
mailings, afforded the Inspection Service with additional investigative
tools and extended penalties to be levied upon violators of the law.
One section of the law applies specifically to the type of mailing made
by the ``Revenue Resource Center'' out of Boca Raton Florida.
The mailing done by ``Revenue Resource Center'' offers to provide a
service that the government provides for free for a $12.95 processing
fee and rush service is also offered for an additional $2.00. For the
fee, the Revenue Resource Center will calculate the amount of a refund
the taxpayer is due. The paid service is provided for free by the IRS.
Millions of taxpayers will receive notice of the amount of their refund
checks and when they can expect them.
The law provides that any solicitation for the purchase or payment
for any product or service that is provided by the federal government
for free must contain a clear and conspicuous statement that this
product or service may be obtained from the Federal Government for
free.
On July 17, 2001 a Complaint was filed by the U.S. Postal Service
against the mailing for violations of the Deceptive Mail Prevention and
Enforcement Act. The Complaint will seek penalties, the new law allows
for penalties based upon the number of mailings. The penalties can
range up to $1,000,000.
The investigation is ongoing. I will keep the Subcommittee informed
of any additional activity regarding the subject mailing. In the past
we have seen operations such as this one spring up in a various
locations in an effort to stay one step ahead of law enforcement.
Thanks to the vigilant oversight of this Subcommittee, the specific
legislation passed last Congress, and the swift action taken by the
U.S. Postal Inspection Service consumers have been alerted and the scam
will be halted.
Chairman Houghton, Members of the Subcommittee, I will be glad to
answer any questions about the investigation that the Subcommittee
might have. Thank you.
Chairman Houghton. Before we go to questions, I would just
like to introduce two other Members of the Subcommittee. Mr.
Johnson over here--let me just put it this way. Anybody that
has been in the military knows who a hero is, and this is a
genuine 14-carat hero down here. And we are honored to have him
on the Subcommittee, a wonderful contributing member.
And also over here, here is one of the new stars of
Congress. He is from North--you better believe it--Dakota, is
that what you call it?
Mr. Pomeroy. North, by God, Dakota.
Chairman Houghton. But anyway, thank you very much for
coming.
Mr. Pomeroy. Mr. Chairman, if you would yield, I might
observe the--on the hero scale, we have kind of laid out, in
respect, from most heroic down to me.
Mr. Johnson. What part of Dakota was that?
Chairman Houghton. You know, I would just like to ask you a
couple questions, and then I will turn it over to you, because
I know you have some.
I would like to ask the basic question, is it necessary to
have any explanation at all from anyone about these rebate
checks?
Mr. Wenzel. Let me respond to that. I think it was very
critical to share with taxpayers the amount that they would be
receiving and the date that they would be receiving their
refund check. I mean, when taxpayers started to hear about the
possibility of the advance payments for 2001, we received that
kind of inquiry, and we felt it was very important to let
individuals know that.
Chairman Houghton. Well, I have got another question that
sort of tags along to that.
To help get the word out about the circulation of the tax
rebate, can you explain to all of us here the details of the
refund accounts? I know it is very easy to determine the amount
each person will receive, but what about the details of the
refund amounts?
Mr. Wenzel. On the amount itself, as to how they are
calculated?
Chairman Houghton. Yeah.
Mr. Wenzel. You know, it is an excellent opportunity for me
to put in a plug here for our Web site.
Chairman Houghton. Go right ahead.
Mr. Wenzel. And I really want to do that, because the
details of that are on our Web site www.irs.gov. So it is
really easy to get into, and right on our front page when it
comes up on the ``Digital Daily,'' all you have to do is click
in and it points you to about six pages of information about
how one gets the advance payment, how it is calculated; and it
goes on, as I said, for six pages.
But I think one of the real highlights of this Web site is
the fact that we give three specific examples: one that deals
with a single taxpayer, one that deals with a head-of-household
taxpayer, and one with the joint filing taxpayer; and it gives
you the different scenarios in terms of the calculation and so
forth.
Now, certainly not everyone has a computer at home or in
their office that they could pull this down, but certainly a
community center or a library--so, if they went in and just
called down the www.irs.gov, it would give you a real clear
explanation as to how the payment is calculated.
And then our notices, the 112 million notices that we sent
out really provided the information--as best as we can put it
in writing, and making it as concise as possible; and we were
able to do that actually in just a half a page--in terms of
what is a lesser amount, in terms of a couple, three conditions
that would prevent one from receiving payment and the actual
amount of their advance payment check.
We supplemented that, of course, with various--as I mention
in my testimony--news releases, and they have gotten a lot of
coverage around the country, front page news coverage;
electronic media, TV, radio, if you will, took the time to
explain how to calculate the amount one would get depending on
their filing status. And also there were charts explaining
when--stating when one might expect their refund check, and
that it is dependent on the last two digits of their Social
Security number.
Chairman Houghton. And just a quick question for you: Who
did these mailings, these false mailings, go to usually? What
is the usual target?
Mr. Maxwell. The usual target--again, it depends on the
circumstances, and I have often thought if you look at
indicators of the economy, one should also include fraud
complaints, because if you have unemployment situations, you
are going to get work-at-home schemes cropping up. If you have
a bad financial picture, you are going to have credit repair.
You are going to have credit advance-fee schemes.
In this instance, it obviously affects the entire country,
so everybody, in this instance, I think, would be vulnerable to
this type of scam.
But often deceptive mailings target certain sectors or
demographics. For example, in one very major case we had, which
was a deceptive mailing case and a telemarketing case, it was--
used both strategies. The average age was 74 of the victim, and
in that case, we actually had well over 12 million lost. So it
is pretty significant. So they do definitely target.
Chairman Houghton. Okay. Mr. Coyne, would you like to----
Mr. Coyne. Thank you, Mr. Chairman.
Mr. Maxwell, you indicated that the first notice that the
postal inspectors had of this was from a Member here, a staff
Member?
Mr. Maxwell. Yes.
Mr. Coyne. You placed information on the IRS Web site
alerting people to this problem. What other methods would you
consider to get the word out to people that don't have access
to a Web site?
Mr. Maxwell. Well, one of the things, again, that we found
in reaching people, 2 years ago we conducted a national mailing
called Project Know Fraud, that focus primarily on
telemarketing, but it included all frauds by alerting people
where to go when they are victimized.
And what we found after we conducted nine focus groups,
different age categories in different sectors of the country,
and we found out, to our dismay, being in law enforcement, that
most people in this country do not know where to report the
crime of fraud. They get very confused as to, who do we report
frauds to?
In this instance, IRS, maybe Treasury? We received our
first complaint in this case just this week; I would expect we
will get a lot more soon.
But that is the problem. Prevention and education can be
effective in a variety of ways. The Web site is great, but as
you say, that is limited to people who are computer oriented.
Newspaper ads.
We are in the process now--actually, next week, working in
our Pittsburgh office with a local firm to prepare a mailing
focusing on, again, on seniors that are subjected to
telemarketing. Seniors are deluged sometimes. They are on
mailing lists, and they will be called relentlessly.
So we are looking at another mailing, another postcard and
possibly putting posters in post offices around the country. We
have done that with child exploitation, and we think in fraud
you can't do enough of that. I am a big advocate of prevention
and education to the degree we can.
Mr. Coyne. Mr. Wenzel, is any tax legislation needed to
prevent this type of scam?
Mr. Wenzel. Congressman, we don't think so. Right now the
Deceptive Mail Prevention and Enforcement Act seems adequate to
address the problem.
The public knows that it can obtain free information from
IRS. For example, our Publication 17 is the document that we
issue every year for individuals that, want to prepare their
annual 1040 form. That publication is made available to other
private sector companies as well. But we feel confident that
the public knows that it can obtain it from the IRS free of
charge. They can go to the IRS to obtain the like publication.
So we are comfortable with that.
Mr. Coyne. Mr. Maxwell, do you have any idea, estimate, of
the number of people who have responded to the Revenue Resource
Center?
Mr. Maxwell. Right now, like I said earlier, we have just a
handful of letters that we were able to find for that address,
and that is all that has come in so far. Hopefully, we will be
able to get a better handle in the next week or two on how many
actually would have come in, because we will be able to stop
them, stamp them and return them once we get the representation
order, which I am confident we will be able to get.
I think we have gotten this very early, and certainly I
couldn't ask for any better result than this because of the
swift action.
Mr. Coyne. Do you have any sense of the source of the name
and address that--names and addresses that the Revenue Resource
Center used?
Mr. Maxwell. Yes.
Mr. Coyne. What the source of that was?
Mr. Maxwell. Yes. And if I may, I would like to hold back
that information until it becomes public, because it is ongoing
investigation. I will be glad to provide it to you as soon as
we can make it public, and I could do so through the staff.
But, yes, we are aware of who is holding that box and also
their address that I mentioned earlier up in the Northeast.
Mr. Coyne. Thank you. Thank you, Mr. Chairman.
Chairman Houghton. Very good. Mr. Johnson.
Mr. Johnson. Thank you, Mr. Chairman. It is a pleasure to
be with you today, and would you allow me to enter the remarks
in the record, please?
Chairman Houghton. Yes.
Mr. Johnson. You know, I think you have done a good job
with the summer rebate. And it is so simple, I don't know why
it needs an explanation, frankly, but people gripe about you
all sending the card out ahead of time.
But let's face it, you are doing that to try to find out if
there are any bad addresses out there that you don't want to
send a check to and have it rebated. So I appreciate what you
are doing, and I think that most taxpayers can go to any number
of reputable Web sites and free places to find information.
In fact, my own Web site, wwwa.house.gov/samjohnson, has
your information on it, and I think, Mr. Chairman, that we
ought to get the whole Congress to put a warning out on this
fraud that is going on because, you know, if we do that, then
you are going to have people from all over the country pulsing
our Web sites and finding out about this kind of stuff that is
going on.
I am glad to know that you are interceding on letters
coming back, but what can you do, if you would answer, to stop
it totally by closing those mailboxes down? Can you do that?
Mr. Maxwell. Yes. That is what the false representation
order would do. In essence, the mail for that promotion would
never go through, so anybody responding to this particular
notice, that mail would never be delivered, so the money
wouldn't get to them.
Mr. Johnson. How do you and your system sort that mail out?
Mr. Maxwell. There are indications--when it is addressed to
that, the postmaster is instructed by the order to review it.
If they suspect that that is the mail, then they hold it aside.
The actual owner of the box, the addressee, can come in and
say, yes or no, and they open it in front of us; that is
required if there is any doubt.
Normally, it is marked in a certain way. It will come in,
you know, addressed to that address, and that may be the only
mail in this instance coming to that address.
Mr. Johnson. So you just ``return to sender?''
Mr. Maxwell. ``Return to sender,'' yes. It has a stamp on
it saying ``False Representation Order Issued,'' ``Return to
Sender.''
Mr. Johnson. I see. But you can't actually physically close
the boxes down?
Mr. Maxwell. That gets a little difficult, in the sense of,
one, we are dealing with a commercial mail receiving agency,
which we don't regulate. We can hold delivery of the mail, but
what we can do is return the mail for that promotion. Any other
mail, they can get, unless we have evidence of some other
crime.
Mr. Johnson. Okay. And you have answered who they are
targeted to, and I think you are right on target with that.
Thank you.
I think the information--getting the information out there
is pretty important, Mr. Chairman. Thank you.
Chairman Houghton. Okay. Thank you, Mr. Johnson.
Mr. Pomeroy.
Mr. Pomeroy. I thank the Chairman. I commend you for your
timely crackdown on this. I used to be an insurance
commissioner in the mid-eighties, and it was not at all
uncommon to see dummied-up, government-looking documents sent
to seniors with all manner of insurance solicitations that have
since been largely regulated out. But there is always a new
wrinkle, and so I am very pleased that you have cracked down in
this way.
There are some--as long as we are talking about the
mailings, some issues I would like to explore with you. The
cost of the mailings is $32.5 million, and the mailing will be
a letter saying, We are about to send you a check.
It reminds me of the--some of the correspondence I get from
my health insurance, This is not a bill. My inclination, well,
if it is not a bill, why are you sending it to me?
I think there will be a bit of that relative to the expense
we put behind this mailing. I think perhaps the mailing will
have the greatest benefit in bringing disappointing news to
those not getting the refund that they are now expecting.
Fifty-one million Americans, something like 44 percent of the
constituents I represent are not going to get their full refund
in light of the--having not had the taxable income, excluding
the Federal Insurance Contribution Act tax (FICA), of course,
which they pay.
What has been the--how is the mailing addressing this--
informing people they are not going to get the refund they have
expectation of receiving?
Mr. Wenzel. Yes. There was a separate letter that we sent
to those individuals that notified them that they would not get
the refund this year. And we go on to explain in our letter--
again, we were able to do that in just one page in terms of
being concise and brief--and the second paragraph explains that
individuals who had taxable income and paid Federal income
taxes in the year 2000 and who could not be claimed as a
dependent on someone else's are eligible.
And then it says--we go on into the third paragraph, and
this is very important--however, if you pay income taxes in the
year 2001 and are otherwise eligible, you will be able to claim
a credit on your 2001 tax return--and instructions on how to
determine if you qualify for the credit will be provided in the
2001 Federal income tax return. In addition, you may be
eligible for tax relief in future years as Federal taxes are
scheduled to be reduced further.
So what this is saying to them is, while they may not be
eligible right now for the reasons cited in the second
paragraph, their situation may have changed in the current
year, and as they file their tax return for tax year 2001, they
would possibly be eligible.
Mr. Pomeroy. Are these personalized letters or is this one
generic letter everyone gets?
Mr. Wenzel. It is the same letter that goes to everyone,
yes.
Mr. Pomeroy. Oh, I am afraid that might still be quite
confusing. In fact, even your description of it may fall a
little short of actually letting people know you are not going
to get the refund that has been generally promised to all
taxpayers, and here is why.
I believe failure to provide information just that clearly
is going to result in Members of Congress and others, most
particularly the IRS, getting an awful lot of phone calls.
Mr. Wenzel. Yes, Congressman. And again, we offer our phone
number in terms of a further explanation. If this was not
clear, we again try to refer the individuals to our Web site
that has really complete information and----
Mr. Pomeroy. If someone gets that letter and is well aware
that out of their paycheck comes--you know, it is a significant
tax withholding, FICA tax deduction--do you think they will be
able to understand that, well, the FICA tax deduction doesn't
get you a refund; it has got to be income tax, not FICA tax,
that will get you the refund? Is that going to be clear from
that text?
Mr. Wenzel. We hope so. I mean, we have tested this and
tried it on a number of individuals, and we felt that this
would help adequately explain how you are eligible. In this
case, why you are not eligible this year, and then going on to
say there may be the opportunity to be eligible in the
current----
Mr. Pomeroy. But the same letter says you are getting a
refund unless you are not getting the refund. Is that kind of
how--how does the first paragraph read in this thing?
Mr. Wenzel. The second paragraph says, in general----
Mr. Pomeroy. No. The first paragraph.
Mr. Wenzel. ``We are pleased to inform you that the U.S.
Congress has passed on the''----
Mr. Pomeroy. May I see that letter?
Mr. Wenzel. Sure.
Chairman Houghton. Here.
Mr. Pomeroy. Thank you, Mr. Chairman.
Mr. Johnson. Can we all get a copy?
Mr. Pomeroy. So here is the letter:
``We are pleased to inform you that the U.S. Government
passed, President George W. Bush signed into law, the Economic
Growth and Tax Reconciliation Act of 2001, which provides long-
term tax relief for all Americans who pay income taxes.''
Individuals with taxable income who cannot be claimed as a
dependent are eligible to receive immediate tax relief in the
form of a check.
You know, as I look at this, having--I have done dozens of
senior citizen insurance forms, going over in very detailed and
painstaking ways what to understand from the materials they
receive and whatnot. I believe that the 51 million Americans
not receiving a refund will not find it clear from this. I
think that we might expect some significant volume of calls.
I wish, in fact, that there had been two mailings, a
mailing to those getting full refunds saying, Expect the
refund--again, whether or not that is a sound expenditure; the
judgment has been made that it is--but a specific mailing to
those not receiving it, laying out very clearly why not. I am
not quite sure this gets it done.
The final point I would ask is your comment on page 2 of
the testimony that approximately 500,000 have been mailed
incorrect statements. What was that?
Mr. Wenzel. When we programmed the change, the law, we
thought it was programmed correctly. We have a quality
assurance function in our Chief of Information office, part of
the Internal Revenue Service, and we kept testing the program
that was provided as a result of this law. And as part of that
programming, the quality assurance part, I should say, we share
20 scenarios, case scenarios, if you will, with our Treasury
Inspector General for--Tax Administration.
In their review and in our ongoing review of the program
that was conducted in order to administer these advance
payments, there was a mistake that was made, a human mistake by
one of our programmers, that resulted in an incorrect
calculation that would have resulted in a larger refund going
to approximately 500,000 taxpayers than what they were actually
entitled to. So we caught it before the checks have been
issued, in the sense that----
Mr. Pomeroy. The good news is, you don't have to go shake
people down for their money back, but you do have a significant
disappointment factor.
Mr. Wenzel. Once we caught that, we made the correction in
terms of the programming, and as I said, the correct amount
will be going out on the checks here shortly. But we also plan
on sending a letter to the approximately 500,000 taxpayers,
letting them know what the correct amount is.
Mr. Pomeroy. You know, I stand corrected. You did send out
two letters, apparently.
Mr. Wenzel. That is correct.
Mr. Pomeroy. One to those receiving--this is very
straightforward. As part of the immediate tax relief, you will
be receiving a check in the amount of X during the week of X. I
get that.
I wish there had been similar clarity to this letter: You
are not receiving a refund; you didn't have enough taxable
income; FICA tax didn't count for purposes of this law. I think
that would have much more clear than this. This is virtually
incomprehensible; this actually never does say, You are not
getting a check, does it?
Mr. Wenzel. Well, I would hope that one could conclude from
in that they are not entitled to a payment----
Mr. Pomeroy. Oh, I see the second part of that, according
to information, you either did not pay and therefore do not
have taxable income or--I am sorry. It does say that.
It says it most directly, Mr. Chairman, although late in
the second paragraph.
Well, I think we are all going to be getting quite a few
calls and further clarification, a little more straightforward
denial letter might have been helpful in that regard. I don't
fault the Service in any way. I think this represents very
prompt turnaround from an assignment that was abruptly given to
you, and so I commend you for your best efforts and, in
particular, finding the fraudulent abuse of this.
I thank you and yield back.
Mr. Wenzel. Thank you for that comment, Congressman.
Chairman Houghton. Yeah. I have got--maybe others have got
a question; I have got a specific question.
I mean, we have got this issue, and it seems to me we are
right on top of it. The error was made, they corrected it, the
check will go out. There will always be some questions on it.
But the broader issue is that this goes on all the time. I
mean, you see them in Social Security. You see them in
Medicare. I mean, I can remember being on the Grace Commission
in 1982, and the continuation of that, and some of the
economies that were going to happen, and it would affect
individuals. It gets everybody all excited, and we are sending
money in order to get the inside information. It is a blight on
our society.
Do you see this thing proliferating? Is there anything we
can do?
Mr. Maxwell. Well, there are two things. One, Congress did
do something last year with that legislation, and what we have
seen--and I mentioned this at a hearing about 2 weeks ago on
cross-border fraud--what we have seen since that legislation in
the area of deceptive mails, where I reported a 26 percent
decline in these types of mailing complaints to our fraud
complaint system.
We have since actually looked at it in more depth, and we
found out that our calculations were conservative, that if we
include all the mailings that we associate with deceptive
mailings, it was closer to a 37-percent decline since the
enactment of the legislation. That is a big step.
The problem is, those are the people who complain, and that
is good, and I am pleased to see that it is declining and that
the legislation, that we can do things like we are doing here
quickly, swiftly, with certainty.
What concerns me is what you are alluding to, is what
happens to the folks who don't complain, there are a lot of
them. They are either too embarrassed to complain, or they have
lost their money; and many times it is people with very little
money to lose, and they go for something like this. That is
where the prevention effort comes in. And what Congressman
Johnson said about the Web site, I think that certainly should
be explored to every extent.
One thing I probably could add, in addition to Know Fraud,
there is an ongoing Know Fraud Campaign. Next week and the week
after, we are partnering with some local agencies in the cities
of Phoenix and Atlanta to do what we are calling ``town hall
meetings.'' We are bringing in the U.S. attorney and the
attorney general, and we are reaching out--it is an outreach--
to the public, and we are going to illustrate in those areas
what types of fraud schemes are most prevalent, introduce the
agencies that deal with those issues, where they go to report
those types of crimes, what to look for.
In fact, I think this would be a good case to throw up as
an example. Here is something everybody expects. It is a good
thing that someone is trying to make look bad, and these are
the things that you need to be educated about. Because if you
can teach somebody about fraud and what to look for, you can
prevent it, where if somebody gets robbed, that is a little bit
more difficult to stop.
But if you could educate people to be careful what they do
with their money, then it is a lot better.
Chairman Houghton. Okay. Thank you.
Do you have any questions? Do you have anything?
Well, listen, this is on ongoing problem. It is wonderful
to know that people like you exist and are on top of it.
We want to help you in any way we possibly can, and we
might have another hearing like this. So thank you so much.
[Whereupon, at 2:42 p.m., the hearing was adjourned.]
[Submission for the record follows:]
Statement of the Hon. Betty D. Montgomery, Ohio Attorney General
Most of us are familiar with various junk mail offers. We have all
received the slick mailers with eye-grabbing headlines enticing us to
read about an ``exciting'' or ``exclusive'' offer. While most consumers
disregard these solicitations, many fall victim to these potentially
deceptive business practices. They include personalized messages and
purported official documents that lead consumers to believe that they
are recipients of official government documents. It is only when you
read the fine print that you discover what is really being offered and
who is actually behind the solicitation.
A prime example is a current mass mailing being distributed to
consumers throughout the United States. Two weeks ago my office was
contacted by a member of the press who had talked to a constituent who
received an official-looking postcard from ``Revenue Resource Center''
of Boca Raton, Florida. This company promised to estimate the
consumer's Internal Revenue Service refund and ``assure proper
delivery,'' all for $12.95 ($14.95 for ``rush service''). This
particular consumer was wise to question what appears to be a mail
scam.
This official looking postcard titled ``2001 Form 16-B, Taxpayer
Refund Information Card,'' asks for consumers to fill out a brief
``information worksheet,'' which asks for marital status, what
government benefits the consumer receives, if children are living at
home, whether taxes are withheld from paycheck, and if the consumer
filed tax return last year. There is one line on the card that states
the company is not a division of the Internal Revenue Service or the
Federal Government. However, on the other side of the postcard, it
states that it is a ``non-partisan bureaucratic agency.'' This
statement implies that they are a quasi-federal agency. Further, the
post card gives the impression that they have access to consumer tax
records.
While state consumer protection laws vary from state-to-state,
individual chief law enforcement officers will need to determine
whether these business practices violate state consumer protection
laws. Based upon our review of the postcard, it appears that it
violates our consumer laws. As the Consumer Protection Chairperson of
the National Association of Attorneys General we are constantly trying
to educate and identify initiatives and safeguards to further protect
consumers from possible abusive and deceptive practices, through multi-
state working group activities and enforcement actions. The consumer
protection-working group is currently examining such business
practices. However, due to confidentiality concerns we cannot comment
on our specific ongoing investigations.
All state Attorneys General have the obligation to help educate
consumers from possible scams. In this case, our office has taken a
number of steps to educate our constituents by issuing helpful tips
through the media. Among the tips we suggest:
You do not have to do anything to receive the income tax
rebate from the federal government;
You do not have to pay anything to receive information
about your tax rebate; and
There is no guarantee that the rebate information that
this private company promises is reliable.
We are telling consumers to wait for the letter that will soon be
mailed by the Internal Revenue Service that outlines rebate
information. We also warn consumers to be wary about giving out
personal information, such as a bank account, credit card number, or
social security number. That information can be used to make unwanted
charges on your credit card. The information can also be used to steal
your identity.
Because these postcards are being mailed through the postal system,
it should be noted that the federal government has jurisdiction over
postal issues. Specifically the United States Postal Service has the
authority to enforce the False Claims Act under Title 39 USC Sec. 3005.
They also have the ability to stop the mail and get a temporary
restraining order under Title 39 USC Sec. 3007, which were strengthened
under the federal sweepstakes law recently enacted by Congress.
State Attorneys General are not only here to enforce the law, we
are here to protect consumers. Often vulnerable consumers, such as the
elderly, trust what they receive through the mail. Because some are
trusting and not sophisticated enough to read the fine print (or may
not be able, literally, to read the fine print if it is too small),
these companies have been successful at using the ``official'' name of
good government for financial gain.
We appreciate the opportunity to submit these comments and look
forward to working with your committee in developing an effective and
comprehensive approach to protecting consumers from deceptive mail
solicitations.