Xiaomi has just given a global launch to two of its latest flagship phones, the Xiaomi 17 and 17 Ultra, along with a Leica-branded Leitzphone edition of the Ultra. There’s no sign, however, of the 17 Pro, which launched in China with an additional display mounted next to the rear cameras.
Technology
How scammers use AI tools to file perfect-looking tax returns in your name
When you think of “tax fraud,” you probably think of people who find ways not to file their taxes honestly. But with the advancement of artificial intelligence, there’s a new type of tax fraud out there.
This one involves hackers using a form of identity hijacking to file a tax return in someone else’s name and get the refund sent to them.
The dark web is revealing that tax fraud is on the rise. Here’s what you need to look out for to avoid becoming a victim.
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Post-it note on a tax form (Kurt “CyberGuy” Knutsson)
What is AI-powered fraud and identity hijacking?
AI-powered fraud is when hackers utilize AI’s abilities to commit sophisticated acts of fraud. One type of AI-powered fraud is known as identity hijacking, which is when hackers not only steal someone’s identity but impersonate them in all sorts of ways. One example is through deepfakes, which can have scary consequences for more than just the person being impersonated.
WHAT IS ARTIFICIAL INTELLIGENCE (AI)?
Another is through AI tax fraud, which is when the hacker uses AI to take your sensitive information and use it to ultimately get your tax return sent to them.
But how exactly do they do this?
Laser scanner over a person’s face (Kurt “CyberGuy” Knutsson)
MORE: DON’T FALL FOR THESE SNEAKY TAX SCAMS THAT ARE OUT TO STEAL YOUR IDENTITY AND MONEY
How fraudsters are using AI to commit tax fraud
This new type of tax fraud was reported by the CEO of LexisNexis Risk Solutions’ Government group, Haywood Talcove, a cybersecurity and data analysis company.
The acceleration of fraud through AI
Historically, tax fraud has involved the use of stolen Personally Identifiable Information (PII), which refers to data that can be used to identify you. It includes both sensitive and non-sensitive information.
Sensitive PII: Full name, Social Security number, driver’s license, mailing address, credit card details, passport information, financial records and medical history. Companies often use anonymization techniques to protect sensitive PII when sharing data.
Non-sensitive PII: Zip code, race, gender, date of birth and even information available on social media sites. While non-sensitive PII is less critical, it can still contribute to identifying you.
Thanks to AI, criminals can now more efficiently exploit stolen (PII) Personally Identifiable Information for fraudulent activities.
The process: From PII theft to fake IDs
Hackers may acquire PII through various means, such as phishing scams or malware. This information is then used to create fraudulent IDs, complete with the victim’s details but the fraudster’s photograph.
Exploiting facial recognition for IRS access
With a fake ID in hand, fraudsters can bypass the IRS’s facial recognition security measures, allowing them to file tax returns in the victim’s name and redirect refunds to their accounts.
IRS documents (Luke Sharrett/Bloomberg via Getty Images)
The call for enhanced verification measures
Experts are urging government agencies to implement more robust verification processes, such as cross-referencing IDs with DMV records, to combat this sophisticated form of tax fraud.
MORE: WHY YOU SHOULD NEVER CARRY THESE THINGS IN YOUR WALLET
How to determine if someone filed a tax return in your name
When the IRS identifies issues with your tax return, it will send you a letter before issuing any refunds. This notification provides an opportunity for you to flag the initial return as fraudulent and proceed with filing normally.
The IRS employs systems to detect suspicious returns. However, if its algorithms fail to identify anomalies and process a fraudulent return, you won’t discover it until you attempt to file your own return and encounter rejection.
In most cases, the second option is more common. Taxpayers typically receive an e-file rejection notice, which indicates a problem. Unfortunately, these notifications lack specific details. Instead, they merely highlight an issue related to the Social Security number. If you haven’t accidentally transposed any digits, it’s likely that tax identity theft caused the rejection.
What happens after the scammer files a fake tax return in your name?
The primary consequence of a fake tax return is the theft of your tax refund. The scammer essentially impersonates you and diverts your rightful return into his bank account. But the trouble doesn’t stop there. When you try to file your legitimate return, the IRS system will likely reject it due to a duplicate filing. This throws you into a bureaucratic maze to resolve the issue and prove your identity.
Adding to the frustration, tax identity theft is a growing crime, and the IRS processes for resolving these situations are still evolving. This can mean extended delays and uncertainty while you straighten things out.
Scam written on tax documents (Kurt “CyberGuy” Knutsson)
MORE: HOW IMPOSTERS ARE TRYING TO EXPLOIT YOUR GRIEF AND WALLET IN A NEW FUNERAL SCAM
6 ways to protect yourself from AI tax fraud
Again, since this is a relatively new scam, cybersecurity experts are still learning a lot about what it looks like and, therefore, how to mitigate it. However, now that you are aware it’s out there, here are six things you can do to keep yourself safe.
1. File your taxes as early as possible. If you beat them to it, they can’t commit the fraud.
2. Never share your personal information, especially your Social Security number or other PII information, on messaging apps or during a phone call with someone you don’t know. Many phishing attempts lead people to give this information away before they’ve even realized what has happened.
3. Use strong passwords and reset them often. Create strong passwords for your accounts and devices, and avoid using the same password for multiple online accounts. Consider using a password manager to securely store and generate complex passwords. It will help you to create unique and difficult-to-crack passwords that a hacker could never guess.
4. Use an identity theft protection service: Using an identity theft protection service can be a crucial step in safeguarding yourself against tax fraud. Identity theft companies can monitor personal information like your Social Security number, phone number and email address and alert you if it is being sold on the dark web or being used to open an account. They can also assist you in freezing your bank and credit card accounts to prevent further unauthorized use by criminals. See my tips and best picks on how to protect yourself from identity theft.
5. Don’t click on links or files when you don’t know what they are, even if they are from a trusted friend. That friend could have been hacked, and now someone is after you. The best way to protect yourself from clicking malicious links that install malware that may get access to your private information is to have antivirus protection installed on all your devices. This can also alert you of any phishing emails or ransomware scams. Get my picks for the best 2024 antivirus protection winners for your Windows, Mac, Android & iOS devices.
6. Do your best to make sure your sensitive data is not easy to find online. While no service promises to remove all your data from the internet, having a removal service is great if you want to constantly monitor and automate the process of removing your information from hundreds of sites continuously over a longer period of time. Check out my top picks for removal services here.
If you suspect you’ve been a victim of tax fraud, the official IRS website provides step-by-step guidance on how to handle the situation.
Kurt’s key takeaways
It’s no doubt scary to think about all the different ways hackers and scammers can take advantage of you. And because AI is making their work easier, it’s hard to keep up. What will they think of next? That’s why, here at CyberGuy, we do our best to keep you up to date on the latest hacking news, so you can stay one step ahead of the crooks.
In light of the growing threat of AI-powered fraud, what additional security measures do you think the government should implement to safeguard your personal information? Let us know by writing us at Cyberguy.com/Contact
For more of my tech tips and security alerts, subscribe to my free CyberGuy Report Newsletter by heading to Cyberguy.com/Newsletter
Ask Kurt a question or let us know what stories you’d like us to cover
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Copyright 2024 CyberGuy.com. All rights reserved.
The 17 and 17 Ultra will apparently be available soon in the UK, Europe, and select other markets. The 17 — pitched as a rival to the likes of the iPhone 17 and Samsung Galaxy S26 — will cost £899 / €999 (about $1,200), while the larger and more capable Ultra starts from £1,299 / €1,499 ($1,750). The limited-edition Leitzphone will be substantially more expensive at £1,699 / €1,999 ($2,300), though it includes 16GB of RAM and 1TB of storage, along with a few extra accessories.
The 17 is an extremely capable small-ish flagship, with a 6.3-inch OLED display, Qualcomm Snapdragon 8 Elite Gen 5, and large 6,330mAh silicon-carbon battery (though sadly smaller than the 7,000mAh version launched in China). I won’t be writing a full review of the 17, but did spend a week using it as my main phone, and found that the battery cruised past the full-day mark, though wasn’t quite enough for two full days of my typical usage. That’s far better battery life than you’d find in similarly sized phones from Apple, Samsung, or Google.
The cameras impress too, with 50-megapixel sensors behind each of the four lenses, selfie included. Pound for pound, you won’t find many better camera systems in any phone this size.
1/10
The Ultra, unsurprisingly, takes things to another level. It’s much larger, with a 6.9-inch display, and weighs a hefty 218g. Despite that, the 6,000mAh is actually smaller, though I found it delivered pretty similar longevity.
The enormous camera is, as ever for Xiaomi’s Ultra phones, the highlight. There are 50-megapixel sensors for each of the main, ultrawide, and selfie cameras, with a large 1-inch-type sensor behind the primary lens. The periscope telephoto is even more impressive: 200-megapixel resolution, a large 1/1.4-inch sensor, and continuous optical zoom from 3.2x to 4.3x, the equivalent of 75-100mm. Xiaomi isn’t the first to pull off a true zoom phone — Sony’s Xperia 1 IV got there first in 2022 — but the telephoto camera here is far more capable than that phone’s, with natural bokeh and impressive performance even in low light.
The camera capabilities are supported by Xiaomi’s ongoing photography partner Leica, but it’s the pair’s Leitzphone that really emphasizes that. Slightly redesigned from the 17 Ultra Leica Edition that was released in China last December, this includes Leica branding across the hardware and software, a range of Leica filters and shooting styles, and a rotatable rear camera ring that can be used to control the zoom. It’s the first Leica Leitzphone produced by Xiaomi — after a trio of Japan-only Sharp models — and comes with additional branded accessories, including a case with a lens cap and a microfiber cleaning cloth.
Xiaomi has plenty of other announcements alongside the 17 series phones at MWC this year, including a super-slim magnetic power bank, the Pad 8 and Pad 8 Pro tablets, and a smart tag that supports both Google and Apple’s tech-tracking networks.
Photography by Dominic Preston / The Verge
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Free apps are supposed to cost you nothing but storage space. But in this case, they may have cost millions of people control over their own internet connections.
Google says it has disrupted what it believes was the world’s largest residential proxy network, one that secretly hijacked around 9 million Android devices, along with computers and smart home gadgets. Most people had no idea their devices were being used since the apps worked normally, and nothing looked broken.
But behind the scenes, those devices were quietly routing traffic for strangers, including cybercriminals.
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STOP GOOGLE FROM FOLLOWING YOUR EVERY MOVE
Google says it disrupted a massive residential proxy network that secretly hijacked about 9 million Android and smart devices. (AaronP/Bauer-Griffin/GC Images)
How your device became part of a proxy network
According to Google’s Threat Intelligence Group, the network was tied to a company known as IPIDEA. Instead of spreading through obvious malware, it relied on hidden software development kits, or SDKs, that were embedded inside more than 600 apps. These apps ranged from simple utilities to VPN tools and other free downloads. When you installed one, the app performed its advertised function. But it also enrolled your device into a residential proxy network.
That means your phone, computer or smart device could be used as a relay point for someone else’s internet traffic. That traffic might include scraping websites, launching automated login attempts or masking the identity of someone conducting shady online activity. From the outside, it looked like that activity came from your home IP address. You wouldn’t see it happening, and in many cases, you wouldn’t notice any major performance issues.
Google says in a single seven-day period earlier this year, more than 550 separate threat groups were observed using IP addresses linked to this infrastructure. That includes cybercrime operations and state-linked actors. Residential proxy networks are attractive because they make malicious traffic look like normal consumer activity. Instead of coming from a suspicious data center, it appears to come from someone’s living room.
What Google did to shut it down
Google says it took legal action in a U.S. federal court to seize domains used to control the infected devices and route proxy traffic. It also worked with companies like Cloudflare and other security firms to disrupt the network’s command-and-control systems. Google claims it also updated Play Protect, the built-in Android security system, so that certified devices would automatically detect and remove apps known to include the malicious SDKs.
However, Google also warned that many of these apps were distributed outside the official Play Store. That matters because Play Protect can only scan and block threats tied to apps installed through Google Play. Third-party app stores, unofficial downloads and uncertified Android devices carry far greater risk.
IPIDEA has claimed its service was meant for legitimate business use, such as web research and data collection. But Google’s research suggests the network was heavily abused by criminals. Even if some users knowingly installed bandwidth-sharing apps in exchange for rewards, many did not receive clear disclosure about how their devices were being used.
Google’s investigation also found significant overlap between different proxy brands and SDK names. What looked like separate services were often tied to the same infrastructure. That makes it harder for consumers to know which apps are safe and which are quietly monetizing their connection.
300,000 CHROME USERS HIT BY FAKE AI EXTENSIONS
Hidden software inside more than 600 apps allegedly turned phones and computers into internet relays for cybercriminals. (David Paul Morris/Bloomberg via Getty Images)
7 ways you can protect yourself from Android proxy attacks
If millions of devices can be quietly turned into internet relay points, the big question is, how do you make sure yours isn’t one of them? These steps reduce the risk that your phone, TV box or smart device gets pulled into a proxy network without you realizing it.
1) Stick to official app stores
Only download apps from the Google Play Store or other trusted app marketplaces. Some apps hide small pieces of code that can secretly use your internet connection. These are often spread through third-party app stores or direct app files called “APKs,” which are Android app files installed manually instead of through the Play Store. When you sideload apps this way, you bypass Google’s built-in security checks. Sticking to official stores helps keep those hidden threats off your device.
2) Avoid “earn money by sharing bandwidth” apps
If an app promises rewards for sharing your unused internet bandwidth, that’s a major red flag. In many cases, that is exactly how residential proxy networks recruit devices. Even if it sounds legitimate, you are effectively renting out your IP address. That can expose you to abuse, blacklisting or deeper network vulnerabilities.
3) Review app permissions carefully
Before installing any app, check what permissions it requests. A simple wallpaper app should not need full network control or background execution privileges. After installation, go into your phone’s settings and audit which apps have constant internet access, background activity rights or special device permissions.
4) Install strong antivirus software
Today’s mobile security tools can detect suspicious app behavior, unusual internet activity and hidden background services. Strong antivirus software adds an extra layer of protection beyond what’s built into your device, especially if you’ve installed apps in the past that you’re unsure about. Get my picks for the best 2026 antivirus protection winners for your Windows, Mac, Android and iOS devices at Cyberguy.com.
5) Keep your devices updated
Android security updates patch vulnerabilities that proxy operators may exploit. If you’re using an older phone, tablet or Android TV box that no longer receives updates, it may be time to upgrade. Unpatched devices are easier targets for hidden SDK abuse and botnet enrollment.
6) Use a strong password manager
If your device ever becomes part of a proxy network or is otherwise compromised, attackers often try to pivot into your accounts next. That’s why you should never reuse passwords. A password manager generates long, unique passwords for every account and stores them securely, so one breach does not unlock your email, banking or social media. Many password managers also include breach monitoring tools that alert you if your credentials appear in leaked databases, giving you a chance to act before real damage is done. Check out the best expert-reviewed password managers of 2026 at Cyberguy.com.
7) Remove apps you don’t fully trust
Go through your installed apps and delete or uninstall anything you don’t recognize or haven’t used in months. The fewer apps running on your device, the fewer opportunities there are for hidden SDKs to operate. If you suspect your device has been compromised, consider a full reset and reinstall only essential apps from trusted sources.
ANDROID MALWARE HIDDEN IN FAKE ANTIVIRUS APP
Threat groups and state-linked actors allegedly used compromised devices to mask online activity and automate attacks. (Photo Illustration by Serene Lee/SOPA Images/LightRocket via Getty Images)
Kurt’s key takeaway
Residential proxy networks operate in a gray area that sounds harmless on paper but can quickly become a shield for cybercrime. In this case, millions of everyday devices were quietly enrolled into a system that attackers used to hide their tracks. Google’s takedown is a major move, but the broader market for residential proxies is still growing. That means you need to be cautious about what you install and what permissions you grant. Free apps are rarely truly free. Sometimes, the product being sold is you and your internet connection.
Have you ever installed an app that promised rewards for sharing bandwidth, or used a free VPN without thinking twice about it? Let us know your thoughts by writing to us at Cyberguy.com.
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Related Article
This week, Anthropic delivered a master class in arrogance and betrayal as well as a textbook case of how not to do business with the United States Government or the Pentagon.
Our position has never wavered and will never waver: the Department of War must have full, unrestricted access to Anthropic’s models for every LAWFUL purpose in defense of the Republic.
Instead, @AnthropicAI and its CEO @DarioAmodei, have chosen duplicity. Cloaked in the sanctimonious rhetoric of “effective altruism,” they have attempted to strong-arm the United States military into submission – a cowardly act of corporate virtue-signaling that places Silicon Valley ideology above American lives.
The Terms of Service of Anthropic’s defective altruism will never outweigh the safety, the readiness, or the lives of American troops on the battlefield.
Their true objective is unmistakable: to seize veto power over the operational decisions of the United States military. That is unacceptable.
As President Trump stated on Truth Social, the Commander-in-Chief and the American people alone will determine the destiny of our armed forces, not unelected tech executives.
Anthropic’s stance is fundamentally incompatible with American principles. Their relationship with the United States Armed Forces and the Federal Government has therefore been permanently altered.
In conjunction with the President’s directive for the Federal Government to cease all use of Anthropic’s technology, I am directing the Department of War to designate Anthropic a Supply-Chain Risk to National Security. Effective immediately, no contractor, supplier, or partner that does business with the United States military may conduct any commercial activity with Anthropic. Anthropic will continue to provide the Department of War its services for a period of no more than six months to allow for a seamless transition to a better and more patriotic service.
America’s warfighters will never be held hostage by the ideological whims of Big Tech. This decision is final.
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