You may have heard about the recent Chase Bank check fraud “glitch” in which a social media trend encouraged people to write a check for a large amount from their own account to themselves, then deposit the check into their bank account, and withdraw the available funds in cash. Chase is required to make a certain amount of any check deposit available immediately to the account holder and then they review the check and release the rest of the funds. Most of you reading this probably realize that that is check fraud, but thousands of people followed through with the advice. Many even posted videos on social media showing themselves committing this highly illegal act, perhaps completely unaware that they were giving law enforcement all the evidence they would need to prove them guilty of the crime.
The statutes and penalties for check fraud vary by state, but most states impose some jail time and hefty fines. What is most interesting about this case to me is it happened right as I am learning about mistakes of facts and how it affects the Mens Rea of a crime in my Criminal Law course. A quick elevator pitch on what all that means is: in our judicial system, in order for someone to be considered guilty of a crime, they need to have actually done something (Actus Reus), and they need to have the mental state specified by the statute (Mens Rea), usually the intent or guilty mindset. This is built on the idea that we want to protect the innocent, including individuals who accidentally commit a crime. And one of the ways a crime can be accidentally committed is when someone is given false or misleading information.
Chase is already reporting these incidents to authorities, which prompts the question: can they use the misleading information from the social media posts to prove there was a mistake of fact? It probably depends on where they are located, how much the check was written for, and if they can afford a good attorney. Unfortunately, the guilty parties in this case probably committed the crime because they aren’t in a financial position to afford a good attorney, but that is a whole different argument about the flaws in our legal system. More importantly, if they were to use the mistake of fact defense, they would first need to prove that it was an honest mistake, meaning that they honestly didn’t know that it was a crime. Secondly, they would need to prove that a reasonable person would make the same mistake.
This begs the question: would a “reasonable” person be easily influenced by social media? In this case not only was the misinformation being put out into the public, but some people were posting fake videos where they pretended to commit the fraud and withdrew their own money, just to get social media attention. The message people were receiving was: everyone is doing this, so it must be legal. It’s similar to when you’re driving the speed limit on the highway and everyone else is driving 15 MPH over the speed limit. There’s almost this pressure to increase your speed because everyone else is passing you, but to do so would be breaking the law.
Social media has increasingly become an influence in the tax field. More often I receive phone calls, emails, and text messages from clients saying they saw a TikTok that told them some tax strategy, for example, putting your child on payroll to reduce your taxes. Well, that’s a tax strategy that is highly audited. You can’t put your 4-year old on payroll and call it a day. You have to support putting your child on payroll by proving that they are capable of doing the work and proving that they actually did the work with timesheets and work products. But sometimes, I see videos on social media encouraging flat-out tax fraud. Luckily, most of my clients confirm these with me and I explain to them why they can’t do that, but for a small business owner who may not have a tax preparer, these posts can be misleading. Should a taxpayer be held liable for following the advice of a social media post that encouraged them to commit tax fraud?
The question posed played a big part in my decision to go to law school. Tax professionals are retiring at an alarming rate and that’s left a gap for less desirable players to enter the tax preparation space. I, for one, don’t think someone should be held responsible for making a mistake, but I do think influencers who are intentionally spreading lies on social media, should be penalized. After all, they are the ones causing the real harm. And at the end of the day, I want to protect my clients and provide them with the best service possible. Until then, always confirm that tax strategies/life hacks/get-rich schemes/financial advice comes from a reliable source with the correct credentials. And if you are not sure, ask your tax preparer or a tax professional.
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