Here's the Story of the Stanford PhD Who Allegedly Gamed the Texas Lottery (and Won $20 Million)

I wrote recently about the husband and wife team out of Michigan who figured out how to game the lottery, and walked away with almost $27 million over the course of nine years.

But it turns out there’s a greater mystery in the world of lottery watchers. 

Her name is Joan Ginther, and she won the Texas Lottery at least four times in 10 years, while apparently buying thousands if not millions of dollars wroth of tickets.

Oh, did we mention she has a Stanford PhD in statistics, lives in Las Vegas, and yet repeatedly made the trip to a single store in rural Texas to make many of her purchases?

Yes, the plot thickens. And so far at least, nobody knows exactly how she did it.

There are several differences between Ginther’s lucrative story in Texas and that of Marge and Jerry Selbee in Michigan and Massachusetts.

For starters, there’s the fact that while the Selbees are now very upfront about how they made their millions, and were the subject of a very well written report recently on HuffPost, Ginther apparently went underground.

At last report, she lives in Las Vegas, but I can’t find that she’s ever given an interview. My attempts to track her down for this story amounted to nothing.

So, we’re left with reverse-engineering and speculation. 

By far the best attempt to decipher her strategy that I can find came from the work of Peter Murca, a reporter with Philly.com, who wrote about her at length in 2014.

As Murca tells the story, Ginther likely won her first jackpot in Texas the traditional way: blind, dumb luck, walking away with a $5.4 million jackpot in 1993, payable in annual installments over 20 years.

But Murca’s report suggests the experience led her to turn her Stanford training toward the goal of winning the lottery over and over.

And, after spending a considerable amount of time trying to unpack what she did, he comes to several conclusions.

First, he says, she figured out that while the lottery is ultimately a game of chance, logistics made it possible to ease the odds.

In sum, the fact that the Texas lottery had to ship thousands of scratch off cards to stores all over the state, made it possible for people who pay close attention to track how many tickets had shipped, how many prizes were left, and in which stores the likely winners might wind up.

Second, she may have had help. As Murca wrote:

Anna Morales, a worker in the local water department, filed claims for 23 prizes worth $1,000 to $10,000 in seven games from 2009 through 2012 — about as many as Ginther claimed but in half the time. Another $1,000 ticket was cashed by Morales’ husband, Noe, in 2011.

Pure coincidence seems implausible.

Since neither woman consented to be interviewed, and records don’t show who physically bought each winning ticket, let alone whose money was used, explanations for both women claiming so many winners range from generosity to imitation to teamwork.

Third, she apparently played the game of large numbers.

Meaning that over time, Murca concludes she bought a total of $3.3 million worth of tickets in order to win her total $20 million in winnings.

To be clear, that’s an amazing margin, if she figured this out. But it suggests she had figured out a statistical truth that required scale to come to fruition.

And, Murca says, she likely bit hard into her cost of goods, because many of those $3.3 million worth of lottery tickets were winners– just not for the massive multimillion dollar prizes that make headlines.

A few dollars here, a few hundred there, even a few thousand now and again–and Murca concluded the $3.3 million in tickets might have cost her only about $1 million.

To be clear, we don’t know exactly what happened.

The frustrating part about Ginther’s story is that we can’t wrap it up with a nice bow the way we can with the Selbees, or with the MIT students who also figured out how to game the Massachusetts lottery.

Ginther apparently hasn’t given interviews. (If you change your mind, Ms. Ginther, contact me!)

But I think there’s a lesson, even if it’s one I’d never put into personally with something like the lottery.

In every successful business, the founders either have unique access to private information, or else a unique application that can be executed with public information.

The question for any of us in business is: which strategy works best for you?
 

Being A Freelancer Is Not The Same As Being An Entrepreneur. Here's Why

The dream before you take the leap to become a full-time entrepreneur is to have “work-life balance.”

I remember back when I was working my 9-5, a little over a year ago. I had to commute an hour to work each way, which made my commitment closer to an 8-6. And then some days I would need to work late, which meant I wouldn’t leave until 7, or sometimes 8. I’d finally make it home, throw my backpack onto my bed, and sit in my desk chair with the sullen realization that the day was over. I had enough time to cook dinner and do a little late-night writing before passing out and repeating the same dance all over again.

Becoming an entrepreneur, I thought, would give me more time to enjoy some of my other passions.

Being a freelancer is not the same as being an entrepreneur–and here’s why:

Right after taking the leap, and making it known that I was a freelance writer open for business, I quadrupled my income–I am not exaggerating. After building a strong personal brand on the Internet, and mastering the “fast-paced voice” that have driven many of my articles to viral status (100,000 views or more), finding clients wasn’t an issue. Part ghostwriter for CEOs, part copywriter for big brands, and I could work 2-3 hours per day and out earn my previous 9-5 job by a large margin. 

That lifestyle lasted all of 3 weeks.

“You have to take the leap,” I said to one of my closest friends. “Let’s build a company.”

I was under the (naive) impression that building a company was something I could do in those same 2-3 hours each day–except with more upside. 

Not even close.

When my friend (who is my co-founder) took the leap, our first venture failed. And while we kept looking for our next idea, I worked 14-hour days to support both of our overheads. Suddenly, all those things I had originally wanted out of my leap–the freedom to wake up and enjoy the morning sunrise with a warm cup of coffee–were thrown out the window. Instead, I was up waiting impatiently at Starbucks for them to refill my coffee so I could get back to working so we could both eat that month. 

I felt personally responsible for the both of us.

About 4 (exhausting) months later, we found it. We called it Digital Press, and finally, finally, things started falling into place. We made our first hire. And then our second. And with every hire I just kept wondering when that 2-3 hour per day schedule was going to come back around.

Until we hired our 5th person–and I realized I was lying to myself. I wasn’t a freelancer anymore. I was a founder of a rapidly-growing company. And I had just signed myself up for a building process that would take years, not months.

I share this because I notice every aspiring entrepreneur has the same faulty expectations.

You think entrepreneurship is going to be easier than having a 9-5. It’s not.

You think entrepreneurship is going to give you more time to yourself. It’s not.

You think entrepreneurship is going to make you more money, faster. It’s not. (You’re going to end up reinvesting it all into your business.)

You think entrepreneurship is going to give you more freedom. It is, and it’s not.

And your biggest challenge is going to be the thing you assume will be the easiest thing of all, which is work-life balance. 

Instead of starting your work day at 9 a.m. when you walk into the office, it’s going to start at 6:30 a.m. the moment you refresh your email on your phone.

Instead of your work day ending at 5 p.m. when you leave the office, it’s going to end at 1:00 a.m. after you’ve just worked through another chunk on your never-ending To Do list.

And instead of you having some semblance of separation between your “work” and the rest of your life, that line is going to become blurred entirely. You’re going to work on the weekends. You’re going to think about clients while you’re with your family. You’re going to have trouble being present with your significant other. Your entire life is going to be thrown upside-down, and it’s going to be on you to do the hardest thing you’ve ever done in your entire life.

“I’m not working right now.”

Every entrepreneur struggles with this. I see it now more than ever–since I’ve become one. It sounds so easy to draw that line in the sand, but the truth is, we all struggle with it. And we struggle because we care. We care about the work we do, about our partners and our employees and our clients and the future of the company. We care to the point where it becomes obsessive, and eventually that caring starts to turn stressful. 

If you want to become, or are about to become, or have already become an entrepreneur, then you need to admit to yourself that you have no work-life balance. That is the definition of entrepreneurship: you are your work. Without you, the company wouldn’t exist, your clients would buy from someone else, and your employees would work elsewhere. 

Which means, as difficult as it might be, you need to intentionally create that space between yourself and your work–and trust that in doing so, it will actually make the work you do, better.

Can These Small Satellites Solve the Riddle of Internet From Space?

Satellite internet is notoriously expensive, and the business of providing it is notoriously brutal. A startup called Astranis founded by rocket scientists from Stanford University and MIT wants to change that.

The company’s satellites are about the size of a mini-fridge, while traditional satellites are closer to the size of a bus. “Traditional satellites cost hundreds of millions to build,” says co-founder and CEO John Gedmark. “These cost tens of millions.”

Gedmark says Astranis focuses on the software that controls its satellites, which make them more flexible than traditional satellites. By using software-defined radio, for example, the company can more easily change what radio frequencies a satellite uses.

Astranis is joining a new space race led by Elon Musk’s SpaceX and Richard Branson-backed OneWeb to build a new breed of satellite internet network that can reach the entire globe and perhaps compete with more traditional forms of broadband, like cable internet and cellular data services. But Astranis is taking a different approach than other space companies by focusing on bringing down costs.

Traditional satellite communications systems float in what’s called geosynchronous orbit, around 22,000 feet above the Earth. These satellites can provide internet access to remote parts of the Earth, as well as airplanes. But the connections can lag, which isn’t good for real-time applications like online gaming or video conferencing. SpaceX and OneWeb both aim to overcome this problem by launching satellites into what’s called low Earth orbit, which ranges from roughly 100 to 1,250 miles above Earth.

Astranis

The problem is that in order to reach the entire world from low Earth orbit, these companies need hundreds or thousands of satellites, raising the system’s cost. Previous attempts at building low Earth orbit networks ended in bankruptcy, including the Bill Gates-backed Teledesic and satellite-phone companies Globalstar and Iridium.

SpaceX and similar companies, like Jeff Bezos-backed Blue Origin, are trying to reduce the costs of launching rockets, which lower the cost of building such a network. But it’s not yet clear whether these companies could offer internet access at rates that subscribers can afford, and skeptics worry this will end up costing more than just trenching fiber and building cellular towers.

Astranis is sticking to geosynchronous orbit, but it’s building small, cheaper satellites that the company hopes will bring the costs for end-users into the same price range as cellular data.

That plan won’t address the latency issues of geosynchronous orbit satellites, but the company just might be able to bring affordable high-speed internet to places where laying fiber isn’t practical, such as the Pacific islands. Astranis plans to sell bandwidth to internet service providers, rather than directly to end-users. It already has one test satellite in space, and plans to launch its first commercially available satellite next year. Eventually the company could launch dozens or hundreds of satellites; other geostationary satellite communications providers operate anywhere from one to dozens of satellites. Gedmark estimates each Astranis satellite will have a bandwidth capacity of about 10 gigabits per second, which isn’t much compared with a wholesale fiber-optic link, but should be enough to help get remote areas online.

The company received a vote of confidence Thursday from venture-capital firm Andreessen Horowitz, which announced a $13.5 million investment. Andreessen Horowitz partner Martin Casado said the Astranis team was the main attraction. Gedmark has a degree in aerospace from Stanford and previously worked for the Xprize Foundation. Co-founder and CTO Ryan McLinko studied aeronautics and astronautics at MIT, designed hardware for satellite company Planet Labs, and oversaw the creation of the flight-control system for Sierra Nevada Corporation’s Dream Chaser spacecraft. Other team members previously worked for SpaceX, Orbital, and Google.

“Lots of companies understand the software or networking side, but these guys really understood the space side,” says Casado.

Sattelite companies often need billions in capital, but Gedmark wouldn’t discuss how much money Astranis will need to raise to meet the company’s goals. Gedmark says he expects each satellite the company launches to be profitable.

Astranis isn’t alone in trying to find a compromise between gigantic geostationary satellites and networks of thousands of low Earth orbit satellites. O3B, founded by Greg Wyler before he started OneWeb, places satellites between low Earth orbit and geostationary orbit. That reduces latency and cuts down on the total number of satellites needed to provide service. But Gedmark argues that by sticking to geostationary orbit, Astranis is able to reach more places with less gear. “We can send a small satellite out to geo and start making an immediate dent in this problem,” he says.

Space Race

Sheryl Sandberg Talks Facebook’s Response to ‘False News’

Sheryl Sandberg knows that Facebook is coming off a bumpy year, and that the road ahead doesn’t appear any smoother.

“To say 2017 was a challenging year feels like a bit of an understatement . . .” she said on Wednesday at a Morgan Stanley investor conference in San Francisco. “We are taking a number of steps to show that we take full responsibility for everything that happens on our platform.”

Specifically, Sandberg cited the controversy around fake news and misinformation spread on Facebook. The company has also been criticized by users and the political leaders over the fact that fake accounts linked to Russia churned out divisive posts and interacted with Americans in the lead up to the recent U.S. presidential election.

Sandberg said on Wednesday that “it will never be 100% possible” to eliminate all “bad” content from Facebook, but she said the company continues taking steps to fight “false news,” including hiring teams of third-party fact-checkers and vowing to increase the transparency and security around political ads that appear on the service.

“We are working hard and making sure all of the information on Facebook is from authentic accounts,” she said. “Because fake accounts are actually the source of a lot of the false news, and they were the source of all of the election interference we saw.”

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Sandberg added that, contrary to popular opinion, fake news on Facebook is usually more “economically motivated” than driven by politics. “People are writing outlandish headlines so they can get clicks, so they can make ad money,” she said. “So, probably the most important thing we can do is go after the economic incentive and make sure that people who are purveying fake/false news are not making money from it.”

“People want real news on Facebook, we want them to have real news on Facebook,” Sandberg continued. “So, we’re working very hard in this area.”

Appearing at the conference along with Facebook CFO David Wehner, Sandberg also took the opportunity to “answer a question that wasn’t asked” near the end of the session. Referring to the ongoing “MeToo” movement, Sandberg, the author of the book Lean In, about women in the workplace, noted that this is an “extremely important moment for women” with regard to standing up to harassment and seeking more equality in the workplace. Citing a recent survey that found male managers are now more worried about spending alone time with their female subordinates as a result of the recent uptick in harassment claims, Sandberg urged male business leaders to “make sure your firm access is equal” because “even before #MeToo, women were much less likely be mentored than men.”

“Not harassing us is important but basic,” she said. “We need more. We need an equal share of time and attention that gets women into the roles they need.”

Elon Musk Is Putting Wireless Service on the Moon (So If You Go There, You Can Watch Netflix)

It’s been 50 years since humans first landed on the Moon and we haven’t done much there since. But Elon Musk is hoping that will change very soon. He already believes there should be a base on the Moon to fire up public interest in space exploration. Then in December, President Donald Trump announced that he wanted to send astronauts back to the moon as a first step toward more distant objectives, such as Mars, where Musk is already planning to land humans sometime within the coming decade.

Musk has also said that his company SpaceX would not build a moon base although it might ferry people and materials there from Earth. But it apparently is ready to help with something else every lunar visitor needs: a way to contact people at home, communicate with other lunar visitors–and watch Netflix during off hours.

So SpaceX, along with mobile network company Vodafone, Nokia, and Audi, will be building a 4G network on the moon in 2019. Even though 5G networks are being built here on Earth, the partners chose 4G because its technology is both more stable and more able to withstand space travel. 

OK, but why build a wireless network on the Moon so soon, when nobody lives there? It’s true that Musk has said he would take space tourists to the moon in late 2018, and indeed had already collected large deposits from two wealthy individuals for the first such trip. But the planned trip is only a Moon fly-by with no landing, so the lunar tourists won’t get much of a chance to use the Moon’s wireless network. And they won’t need it, having the ship’s communication system at their’ disposal. Besides, the pricey lunar fly-by was meant to take place using a Crew Dragon capsule carried by a Falcon Heavy rocket, the same rocket that spectacularly took off earlier this month with a red Tesla Roadster and mannequin dubbed “Starman.” But Musk has said SpaceX is now focusing its attention on its BFR Rocket (for Big Fucking Rocket) and he indicated it may not do much more testing on the Falcon Heavy after all, possibly leaving Moon tourism in limbo. 

According to one report, the purpose of lunar 4G would be to support future lunar missions. Without it, humans and vehicles (such as the lunar rovers Audi is building) could only communicate by beaming signals down to the Earth and back up again. The fact that the planned network will have enough bandwidth to support video streaming raises the appealing prospect of a lunar webcam all of us could watch over the Internet. 

And of course, it’ll come in very handy for space tourists visiting the lunar surface or astronauts working to build a Moon base or on other projects. Maybe someday soon.

The Bathrooms on American Airlines' New Cramped Planes Are 'The Most Miserable Experience In the World,' says a Pilot

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

Some say American Airlines is going down the toilet.

Oh, not because it’s not making enough money. 

Instead, too many people are severely disliking the bathrooms on the airline’s new Boeing 737 MAX planes.

I’ve written before how Flight Attendants have complained about these planes, which have even more seats than ever. And about how the airline’s CEO Doug Parker admitted he’s never flown on the plane.

Because, why would he?

Now it’s the pilots’ turn to explain just how awful the plane’s new configuration — one that will be extended to many other types of American’s aircraft — truly is.

As View From the Wing reports, employees were having a little open exchange of views with the airline President, Robert Isom.

He has, American told me, flown on the plane.

Still, one pilot tried to explain to him just how bad those bathrooms are.

“It’s the most miserable experience in the world,” he said.

The data is simple. There are 12 more seats, only two bathrooms at the back for 160 passengers.

Oh, and those bathrooms are 75 percent the size they used to be.

“I can’t turn around in it. The sink is the most miserable thing going, and you cram those people in those little tiny seats you just bragged about to the point that I can’t sit back there,” he said.

He added that he’d refuse to sit in the back of this plane if he was asked by the airline to fly in it.

Isom contended that removing the seat-back screens (which saves money) and inserting larger overhead bins “are different and allow us to serve customers in a way that we haven’t before.”

Yes, the passengers certainly haven’t seen toilets like this before either.

I’ve not heard one person praise these loos or, frankly, the Economy Class seats that surely try patience when you’re in them for five hours or more. 

The question is whether the airline will do something about any of it. 

My guess is no, but I did contact the airline to see how it feels after this pilot’s withering criticism. It referred me to Isom’s words, in which he said that nothing is permanent. (Although Parker insists American will always make a profit.)

Isom also explained that it’s all the passengers’ fault.

“Today there is a real drive within the industry and with the traveling public to want to have really at the end of the day low cost seats. And we’ve got to be cognizant of what’s out there in the marketplace and what people want to pay,” he said. 

The Economy Class seat space on these planes has been reduced to a 30-inch pitch.

Perhaps, though, that’s American’s secret psychology.

You’ll be cramped in the seats — American insists it still feels like 31 inches because the seats are thinner.

But they’ll feel like heaven if you go to the toilet first.

America's Iconic Beach Hotel Rings In Its 130th Year In Style

“Iconic” is a word thrown around so much it can become meaningless, but it fits the legendary

seaside resort, Hotel del Coronado, which is celebrating its 130th anniversary this year, like a glove. Set near San Diego on one of America’s most picturesque beaches, the Del has made and been the site of its fair share of history, with a guestbook second to none that dates back to 1888.

A few snapshots: L. Frank Baum writing three of his Oz novels when in residence here at the beginning of the 20th century. Charlie Chaplin playing polo in the 20s. Marilyn Monroe, Tony Curtis, and Jack Lemmon romping throughout the property in the Hollywood classic “Some Like it Hot” in 1959. Royalty (both actual, like King Edward, and de facto such as Walt Disney and Katherine Hepburn), who visited and were treated as such, as well as many American presidents.

Beyond its famous guestbook, The Del is a living legend, a backdrop for creating a grand American beach vacation for the families and travelers from all around the world who flock to California specifically to visit this jaw-dropping property.  

As the property rings in its 130th birthday in 2018, the celebrations are gearing up, with the hotel putting on a year of events, some that highlight the culinary side of this hospitality landmark, some that revel in the sheer beachiness of the location, and some that shine a spotlight on both. (In this hybrid category, the summer season will shine with a beachside Summer Clambake Series, with renowned guest chefs from California and Baja who will join Executive Chef Stefan Peroutka for their take on the California Clambake.)

Add to that Father’s Day concerts, San Diego Pride, Beach Polo, a Chef Throwdown, and a “Hallo-Wine + Spirits” party (among other events), 2018 is a particularly sunny opportunity to visit America’s beloved hotel-and, while you’re there, to wish it a happy 130th.

Few phone makers will survive industry's brutal economics: Huawei

BARCELONA (Reuters) – The smartphone industry is bound to consolidate as the heavy investments required to remain competitive mean that, in the long-run, only a handful of firms can make money, the consumer chief of China’s Huawei Technologies [HWT.UL] said on Sunday.

Richard Yu, chief executive of Huawei’s consumer business group, said anyone at this stage in the decade-old industry’s history that had less than 10 percent market share was losing money.

Huawei is the world’s third biggest smartphone maker, trailing leaders Samsung and Apple, with a 10.2 percent market share in the fourth quarter, according to market surveys from IDC and Strategy Analytics.

“In the future, only three to four vendors can survive, maybe only less than four,” Yu told reporters following a product launch event held ahead of the Mobile World Congress.

He said other, smaller Chinese vendors were consolidating, and most would disappear, as they did not have enough resources to invest in the same levels of research and development, marketing and branding needed to gain global scale.

Richard Yu, CEO of the Huawei Consumer Business Group, presents the new “Huawei 5G CPE” router before the Mobile World Congress in Barcelona, Spain, February 25, 2018. REUTERS/Albert Gea

“If your market share is less than 10 percent you cannot be profitable. Over at 10 percent, at least, you can break even (and) over 15 percent you can make money,” he said.

He said Huawei’s smartphone business grew by around 30 percent in the last year, and would grow even faster this year, with strong growth in both January and so far this month.

Richard Yu, CEO of the Huawei Consumer Business Group, shows their 5G chip “Balong 5G01” before the Mobile World Congress in Barcelona, Spain, February 25, 2018. REUTERS/Albert Gea

Huawei could become the second biggest smartphone maker this year or next, and sooner or later could be No.1, he said, speaking after his company unveiled a new notebook PC and two Android tablets.

It declined to launch a new flagship smartphone as it has done in the past at the Mobile World conference in Barcelona. Instead, it is set to launch its new flagship P20 smartphone at a standalone event in Paris next month, where Yu said Huawei would showcase “big and bold” innovation in camera technology.

The device will compete head-to-head with Samsung’s new Galaxy S9 – launched here on Sunday – and Apple’s iPhone X.

Looking ahead to next generation mobile networks set to roll out starting later this year in several major markets, Huawei also unveiled 5G versions of a consumer network router, its own chipset for phones.

Yu said Huawei will launch its first 5G-ready smartphone either in the third- or fourth-quarter, most likely in its Mate line of devices.

Reporting by Paul Sandle; Editing by Eric Auchard and Daniel Wallis

Yes, Uber Really Is Killing the Parking Business

An email from the CEO of a national parking operator has added some detail to the impact ride-hailing services like Uber and Lyft are having on demand for parking. The picture, at least for those trying to rent you a parking spot, is bleak.

In the email, unearthed from a company report by the San Diego Union-Tribune, Ace Parking CEO John Baumgardner says that demand for parking at hotels in San Diego has dropped by 5 to 10%, while restaurant valet demand is down 25%. The biggest drop, unsurprisingly, has been at nightclubs, where demand for valet parking has dropped a whopping 50%.

The numbers appear to be estimates, and Baumgardner doesn’t describe a timeframe for the declines. The assessment, written in September of last year, is also limited to San Diego, though an Ace Parking executive told the Union-Tribune that it has seen “similar” declines at its 750 parking operations around the United States. The company is focused on using technology, including better parking scheduling and booking options, to remain healthy.

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But much more is at stake than the revenues of the parking business – cities stand to benefit immensely as demand for parking drops. Parking spaces and lots generate relatively little tax revenue or economic activity relative to commercial operations, and by increasing sprawl may actually harm the economy of cities like Los Angeles.

Even back in 2015, cities were already relaxing zoning requirements that set minimum parking allotments, and there are now even more signs that city planners are thinking differently about parking. Perhaps most dramatically, a new Major League Soccer stadium being planned for David Beckham’s Miami expansion team may include no new parking at all – but will have designated pickup zones for Uber and Lyft.

The decline of parking will only be accelerated if and when autonomous vehicles become widespread. That sea-change which will make it easier to locate parking at a distance from urban destinations, and could further reduce car ownership. That will be bad news for the Ace Parkings of the world – but everyone else should welcome the decline of the urban parking lot.

Beware This Incredibly Silly—But Still Effective—Tax Scam

It’s almost Tax Day, which also means it’s peak tax fraud season. The Internal Revenue Service has played some epic games of cat-and-mouse with phone and online scammers over the past 10 years, but the latest scamming trend for 2018 has a particularly devious twist.

Here’s how it works: Attackers use a taxpayer’s stolen identity information to fraudulently file their returns for a refund. They allow that refund to direct deposit into the victim’s actual bank account. Then the real fun starts. The scammers—posing as the IRS—call the victim, demanding that they return the wrongfully allocated refunds. Since the victim presumably hasn’t yet filed their own taxes, it’s easy for them to assume a mistake was made—and send their money to the crook.

That’s right. They give you the money, and hope they can trick you into voluntarily passing it along to them.

“It is definitely a nationwide problem,” says IRS spokesperson Cecilia Barreda. “When people get this phone call and then they go and look at their bank account and actually do see the money there, that lends a greater credibility to what the person is hearing on the other end of the phone.”

Scammers steal the personal information to file for refunds from tax preparers, accounting firms, corporate data breaches, and other identity-theft schemes. The IRS first warned tax professionals about the rise of the new “erroneous refunds” scam at the beginning of February, and released a followup alert for the general public last week.

So far victims have been hit by at least two different versions of the hustle. In one, attackers pretend to be debt collection agents contracted by the IRS to recover fraudulent or mistakenly issued refunds. They instruct the victim how to repay the money to the “collection agency,” and capitalize on the perceived urgency of receiving a call from a collection bureau. In the other scenario, victims receive an automated call claiming to be from the IRS, in which a voice recording claims that the victim could be charged with fraud and arrested for failing to return the money. The recordings also threaten that the victim’s Social Security numbers will be “blacklisted,” whatever that means. Finally, the recording shares a case number and phone number for the victim to call to “return” the erroneous refund.

“One of the reasons this scam has been successful is because it deviates from other scams in the initial victim contact,” says Crane Hassold, a threat intelligence manager at the security firm PhishLabs, who previously worked as a digital behavior analyst for the FBI. “Most scams like this start with an initial communication that evokes fear or anxiety. This scam, though, starts with a somewhat plausible action—the ‘erroneous refund’—then follows that up with the fear and anxiety tactics. Because the initial contact is unexpected and could be interpreted as a simple mistake, it likely makes the usual fear and anxiety tactics more effective.”

As with other types of tax scams, the crucial thing to remember is that the IRS will basically never call you on the phone, and certainly not to demand payment. A call to discuss taxes owed would always be preceded by multiple paper bills, and the opportunity to appeal the amount owed. The IRS also never requires one specific payment method, and doesn’t ask for credit/debit card numbers on the phone. Finally, the bureau never threatens to bring in law enforcement during a phone conversation.

Knowing that should help people discredit virtually all IRS phone scams. If you do receive an erroneous refund, threatening calls are “not an approach that the IRS would take” to resolving the situation, Barreda says. “If you get a call, hang up and always contact the IRS directly and verify what your tax situation is,” she adds. Your bank can return a direct deposit to the IRS while you contact the bureau to explain the reimbursement, and potentially initiate identity theft protections.

Analysts see at least some good in these scam evolutions, because they mean that the steps the IRS has taken to reduce fraud are working, forcing criminals to find new hustles. Then again, that’s not so reassuring for the millions of taxpayers at risk of facing these threats head on.

The Tax Man Scammeth