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👤 Why the IRS wants facial recognition

The Hustle

Over 100 years after sinking 10k feet in Antarctic waters, scientists finally found Endurance, a ship that was captained by Sir Ernest Shackleton. Coincidentally, his 100th funeral anniversary happened to be the same day of the discovery.

In today’s email:

  • The IRS: Its use of facial recognition, explained.
  • Chart: Why are gas prices skyrocketing?
  • Zelle: How the money sender became a hotbed for fraud.
  • Around the web: Windows 98 nostalgia, newspaper archives, concerts for deer, and more fun internet finds.

🎧 On the go? Listen to today’s podcast to hear about big entertainment investments, an insider trading doozy, how gas prices are affecting rideshare drivers, and more.

The big idea
IRS gif

The IRS and facial recognition, explained

There’s been a lot of controversy over facial recognition software. It’s a little creepy, sure, but activists are also ringing alarm bells about privacy and misidentification.

And recently, a key battle involved everyone’s favorite federal agency: the IRS.

The backstory

In January, the IRS announced it would use facial recognition to verify online users’ identities. Notably, taxpayers don’t have to use the IRS’s website, but it’s useful to see past returns or get info about child tax credit payments.

Users provide an ID photo — passport, driver’s license, etc. — and a selfie, which is cross-checked by, a 3rd-party facial recognition software company.

But there was a ton of backlash, leading the IRS to reverse course. On Feb. 21, it announced live video chat with agents as a new option, in addition to facial recognition.

Why the backlash?

While an spokesperson argued that the software would give people without a credit history access to online services and prevent fraud, activists and researchers have identified several problems:

  • It’s less accurate when identifying people of color, especially Black women
  • It forces people to hand over biometric data to private companies
  • It puts biometric data at risk in the event of a breach, which could lead to identity theft, harassment, or stalking
  • It can be inaccessible: one Virginia man couldn’t unfreeze his unemployment benefits for months due to poor cell service

Activists are using the win with the IRS to push for other agencies to drop the tech, currently in use by the Social Security Administration, Veterans Association, and, per CNN Business, the US Patent and Trademark Office.

It’s also used by law enforcement agencies…

… which can have devastating consequences. At least 3 people — all Black men — have been wrongfully arrested thanks to incorrect AI.

One of them spent 10 days in jail and is now suing his city, prosecutor, and police department. Another lost his job.

And although it’s far from the worst face ID fails, here’s the iPhone X’s software totally bombing during its big product launch.

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Walmart partnered with Spotify to include a 6-month premium subscription among its Walmart+ membership perks. #ecommerce-retail

Sun power: Clean energy stocks are going up as oil prices skyrocket amid the Russia-Ukraine conflict. #clean-energy

Crypto rules: The Biden administration is rolling out plans for regulating crypto, considering its benefits but also its security and climate risks. #privacy

Again? Mortgage startup laid off 3k+ employees, ~35% of its remaining staff. This is the company that infamously let 900 employees go over Zoom. #fintech-crypto

Per gallon?!
gas prices infographic

Singdhi Sokpo

Why are gas prices skyrocketing?

Remember the good old days (a year ago) when gas was under $3? Prices are up 50%+ since, and here’s why:

  • Russian oil is de facto banned globally, and investors are pricing gas as if it didn’t exist.
  • Ramping up production is hard, plus producers aren’t used to the Biden administration encouraging drilling.
  • With omicron seemingly behind us, US car trips have increased 25% since the start of 2022.

Understandably, Uber drivers are feeling it, and some are now asking Uber to raise rates so they can afford to drive.

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Free Resource

7 days — until we’re back in LA

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We’re making a night of it. And bringing the bottles. It’s business casual with drinks (and us 🤠).

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Introducing your speakers for the evening:

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Scammer Season
Zelle graphic

Zelle is a hotbed for fraud — and banks aren’t helping

Venmo scared the sh*t out of the banks, so it was only a matter of time before they launched an alternative.

Enter Zelle.

The app, created by America’s 7 largest banks in 2017, supported $490B in transfers in 2021 — more than 2x Venmo’s total ($230B).

But, as the Notorious B.I.G. said, mo money…

… brings mo problems. Per The New York Times, Zelle has become a scammer’s paradise, and the banks aren’t rushing to help.

Scammers love Zelle because payments hit immediately, unlike most bank transfers, which take 1-2 days to clear (AKA enough time for a victim to realize they were duped).

This has led to a flurry of scams on the platform, including:

  • Romance scams, which reached record highs in 2021
  • Crypto scams, which recently became the 2nd riskiest scam, per the Better Business Bureau
  • “Me-to-me” scams, in which a scammer convinces the victim to give up sensitive information to gain access to their bank account

So what are the banks doing?

Not much. The federal law for electronic transfers doesn’t protect victims who transfer the money themselves — which is how most scams happen.

As a result, banks argue they aren’t liable for refunds. Unless, of course, a journalist reaches out: In multiple instances where the NYT contacted a bank that had previously told a victim “no,” the bank offered a refund.

So what can you do if you don’t have a pal at the NYT? One expert says consumers should treat Zelle transfers like they would cash. Even better — go back to cold, hard cash itself.

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🧛 On this day: In 1997, “Buffy the Vampire Slayer” debuted on the WB, starring Sarah Michelle Gellar as the eponymous hero. It would last for 7 seasons, plus land a spinoff series and several comic books.

🐘 Useful: Elephind lets you search historical newspaper archives.

😬 That’s interesting: Researchers say that accepting emotional discomfort as a sign of progress in certain situations can increase your motivation.

🪟 Haha: Relive the magic of Windows 98, Minesweeper and all.

🎮 Cure boredom (for a cause): Bundle for Ukraine is a collection of 900+ indie games available for a minimum donation of $10. Thus far, it’s raised $3m+ for charities providing relief to Ukraine.

🦌 Aww: And now, a sneaky deer that just wants to listen to Simon & Garfunkel.

Meme of the day
taxes meme

Accountants are the real MVP. (Source: Everhour)

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How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

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