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Questions Arising from Common Myths (Part 1)

By Jim Marasco, CPA, Partner

If you’re like me, you may sit around and wonder about fallacies you may have heard and whether they hold any truth. In some cases, clients or students pose some interesting questions. I decided to address a few questions from a fraud prevention perspective.

Do airline/travel sites really switch ticket prices the longer you browse on sites or login from the same IP address?

An Internet Cookie is a file stored on your computer that records specific data from the site you have visited. Some cookies are lost once your browser closes, others last a lot longer. It’s been said often that airline and travel booking sites have used Internet cookies to raise prices on prospective customers. It’s been rumored that if you check prices on different airline sites and go back to the original one, you may find your fare higher than originally quoted. I’ve recently heard a radio personality telling people to change their Google Chrome settings to clear browsing history before going to sites to protect you from this practice. Through my research including a review of a study conducted by a prominent university, there was no conclusive evidence indicating that sites alter prices based on browsing history. It’s quite possible that your ticket price increased in the interim, but more likely due to supply and demand on the available seats for that particular flight or rooms for that hotel, rather than the airlines trying to take advantage of a prospective customer.

Are all credit card receipts earned by businesses and contractors reported to the government?

There are still some small businesses that refuse to accept credit/debit cards. The sign that greets you at the door reads, “Cash Only”. Some are so helpful; they offer an ATM machine that charges an exorbitant surcharge so you can draw cash to give back to them. What are they afraid of? Well, in 2011, the government started requiring third-party payment providers to issue an annual 1099-K to recipients receiving at least $20,000 or 200 or more transactions from credit/debit cards, PayPal, or other payment sources. In addition to being reported to the recipient, they are also reported to the federal government. What’s interesting is that a 1099-Miscellaneous is required to be filed for payments made to non corporate recipients receiving $600 or more. But for credit cards, the threshold is raised to $20,000. Therefore, an Uber driver receiving $19,990 or having less than 200 transactions in a given year, may not have their credit card receipts reported to the government.

Now that we can scan checks into our bank accounts from our smart phones and scanning devices, can the same check be scanned into separate bank accounts?

I tried this myself to experiment for a class I was teaching. I wrote a check to my business and had them scan it in with their normal deposit. The check was cashed. Since this particular bank’s scanning equipment didn’t mark the check, I had our clerk scan the same check two weeks later into a new bank we had switched over to. Interesting enough, the new bank’s scanning equipment marks the checks once they are scanned for deposit, preventing them from being re-deposited. However, within a couple days, the second bank informed us that the check presented for deposit could not be honored which was reassuring. Even more encouraging, we didn’t get charged a fee!

Will traffic infractions in one state go against my driver’s license in the state in which I reside?

The common belief was that if you were caught speeding in one state and paid a fine, your home state would not be notified. As technology advanced, certain groups of states started sharing information. Some truck drivers began to accumulate driver’s licenses in more than one state to hide multiple infractions. However, with the advances of technology, nearly every state now shares driver license activity and states like New York and half of the others, have started sharing picture images as well. According to a US News article, a minimum of 117 million adults have been entered into this network which is shared with law enforcement. By matching images across databases of registered drivers, states have been able to identify individuals using aliases, committing identity theft, illegally collecting benefits, voting and maintaining driver’s licenses in more than one state. New York uses a 128-point facial recognition system. According to their website, they have arrested more than 3,600 individuals for possessing multiple licenses since implementation. As for those points on your license, states treat them differently. Some states assess points from out-of-state infractions; others just note it on your record. The bad news is your insurance company will see it regardless. If it’s serious enough and the visiting state revokes your license, there’s a good chance your home state will as well.

Be sure to signup for our monthly blog posts.  Part 2 of “Questions Arising from Common Myths” will include:

  • Are appliances really spying on us?
  • Do car rental agencies monitor how and where you drive?
  • Will the IRS really send over the police to arrest me for income taxes supposedly due?

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