H&R Block Broker Branch Under Scrutiny; Computer Server Stolen
As H&R Block revealed that National Association of Securities Dealers is considering disciplinary action against the company for allowing improper mutual fund trading and market timing, the tax preparation branch also reported the theft of a server containing client information.
In a Securities and Exchange Commission filing last week, H&R Block reported that its 1,000-person broker-dealer unit violated federal securities laws and association rules, the Arizona Republic reported. The company is one of 20 fund companies and brokerages being investigated for possible trading abuses in the $7.5 trillion mutual fund industry.
In an unrelated event, about 50,000 H&R Block tax customers in the Sacramento area have been notified that a server containing client information dating back to 1998, including names and addresses, was stolen in January. More important data is probably safe, a company spokeswoman told the Sacramento Bee.
"The only readable data on the server was the name and address," H&R Block spokeswoman Denise Sposato told the Bee. "All other details, such as Social Security numbers and tax return information, was compressed. It can't be read without our company's proprietary software, which was not on the server."
But some customers are objecting to receiving notices two months after the January theft that include the words, "So, it is with great urgency that we inform you..." The company blames the delay in notification on a printing error. California law requires businesses to notify customers if they think systems have been compromised leaving client data vulnerable.
With identity theft running rampant in this country, one 78-year-old H&R Block customer was alarmed by the letter, which contained a government pamphlet discussing identity fraud. "I'm disturbed that they gave me all this stuff to read about what I should do," she told the Bee, "but I didn't read anything about what they are doing."
The Bee reported that the California Office of Privacy Protection offers the following tips in the event that your think your personal information may be at risk:
- Contact one of the three companies that track credit histories: Equifax, (800) 525-6285; Experian, (888) 397-3742; and Trans Union, (800) 680-7289 and flag your file with a fraud alert. The phone systems are automated.
- Request and review your credit reports for accounts or activity you don't recognize. Request reports every year.
- If you find questionable items on the report, call the credit bureau to review the report. If the activity cannot be explained, report the crime to local police and call creditors involved.
You may also view the AccountingWEB article "What Should You Do if Your Identity is Stolen?