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A new program in Alabama will take advantage of mobile technology to fight the rising tide of tax refund fraud.
Morphotrust USA has recently secured a contract with the state to create a new program that will allow the state to verify the identities of taxpayers when they file.
The Birmingham Business Journal reports that although financial terms of the deal have not been revealed, the verification option will be free to citizens filing taxes.
Every year, countless citizens go to file their taxes, only to find out that someone else has already filed a fraudulent return using their identity. Alabama’s highest tax bracket takes effect at just $6,001, which has forced states like Louisiana to reconsider their income tax levels.
Alabama’s state income tax isn’t all that high, but it’s apparently high enough to convince people that fraud is the answer.
With the rise of technology, digital crime has skyrocketed, and identity theft is just one of many forms of fraud to be concerned about. In fact, the projected amount of worldwide fraud losses for the next four years is estimated at around $35.5 billion.
Alabama’s new program will take effect later this year. To utilize it, users will first download an app from MorphoTrust on their phones, which will walk them through a three-step process to verify their identities.
First, the user will be asked to take a picture of the back of their driver’s license so the system can process the barcode. Afterwards, the front of the license is photographed to “authenticate that it’s a real driver’s license as issued by the state of Alabama,” said Mark DiFraia, Senior Director of Market Strategy at MorphoTrust USA.
The final step in the process is to take a selfie and submit it to the system, along with the other information recorded. The data gets passed along to respective driver’s license agencies and is compared to what is already in the database.
If everything matches up, then the user will be registered for the service and be able to control their eID from the app.
When a user wants to access their account, they will be presented with a QR code, which the app will then scan to log them in.
“We did not want to propagate the username and password scenario, because that’s actually become the source of most data breaches,” DiFraia said.
Alabama is the third state after North Carolina and Georgia to implement a program like this. Only time will tell if these strategies are effective in the fight against tax fraud.