FAFSA Data Breach Affected 100,000 Taxpayers

April 11, 2017, Written By John H. Oldshue

An issue with the data retrieval tool for the Free Application for Federal Student Aid (FAFSA) may have left 100,000 taxpayers at risk of identity theft. The Department of Education and the IRS suspended the tool in mid-March after uncovering some security concerns, and that suspension will remain in effect through the 2017 application season.

The data retrieval tool pulls data from the IRS, so financial aid applicants can complete their FAFSA’s quickly and easily. A set of cybercriminals tapped into the program and used it to gather information for fake tax returns. Nearly 8,000 refund checks were sent out for these fraudulent returns, totaling $30 million. The IRS was able to catch 52,000 refunds before they were processed and an additional 14,000 before they were sent out.

The IRS is issuing letters to those who were affected by the breach. If you recently completed a FAFSA, monitor your credit and financial accounts closely to report fraudulent activity at the first signs.

In August 2015, more than 300,000 taxpayers were affected by a similar scandal. Hackers used software called “Get Transcript” to gather information and file fake returns. That scam resulted in $50 million in fraudulent refunds.



The information contained within this article was accurate as of April 11, 2017. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About John H. Oldshue

John Oldshue is the creator of LowCards.com. He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for LowCards.com.
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