Criminals are increasingly using stolen identities to open deposit accounts, posing significant risks to victims and complicating responses to identity theft.
Identity theft is evolving, with criminals now employing more sophisticated methods to exploit stolen personal data. One alarming trend is the application for deposit accounts in victims’ names, a tactic that leaves many individuals confused and unsure of how to respond.
Brian, a resident of Clinton, Pennsylvania, recently faced this unsettling reality. He received notifications from two different banks informing him that someone had attempted to open deposit accounts using his identity. Both banks denied the applications and communicated the denials through email and letter, but neither provided any details about the information submitted or the reasons for the denials.
In his correspondence, Brian expressed his frustration: “I understand why fraudsters try to open credit accounts, but why would they try to open deposit accounts? One bank told me they could not share any information with me about the failed application due to privacy policy, and the other bank said they do not save any information from declined applications from non-customers.” He questioned the lack of transparency from banking institutions regarding declined applications and sought guidance on how to respond to these fraudulent attempts.
Deposit account fraud is on the rise as criminals increasingly build synthetic identities and test stolen data. When thieves apply for checking or savings accounts in a victim’s name, they are essentially experimenting to see which identities pass initial verification steps. This information can be critical for planning more damaging attacks in the future.
Criminals often prefer deposit accounts for several strategic reasons. The approval process for these accounts can be less stringent than that for credit accounts, allowing fraudsters to test stolen data without the same level of scrutiny. Additionally, a new deposit account can serve as a means for laundering funds or receiving payments linked to scams, unemployment fraud, or tax refund theft.
Once criminals confirm that a victim’s identity can be successfully used, they may proceed to open credit lines or create a synthetic profile that combines real and fabricated information. Unfortunately, banks are bound by strict privacy regulations under federal law, which limit the information they can disclose about applications, even when identity theft is involved. For instance, while an IP address could potentially help identify a fraudster, banks typically will not share this information without a legal request tied to an active investigation.
To combat the risks associated with deposit account fraud, individuals can take proactive steps to protect their identities. Traditional credit monitoring services may not cover deposit account activity, so it is advisable to utilize services that monitor bank accounts and dark web activity for added protection. Identity theft protection companies can track personal information, such as Social Security numbers, phone numbers, and email addresses, alerting users if their data is being sold on the dark web or used to open unauthorized accounts.
In Brian’s case, he has already placed a one-year fraud alert with the credit bureaus, but he may want to consider upgrading to a seven-year alert. Additionally, freezing his credit with Equifax, Experian, and TransUnion can prevent new credit lines from being opened in his name.
Another effective measure is to utilize a data removal service, which can help scrub personal details from people search sites that criminals often exploit to build synthetic identities. While no service can guarantee complete removal of personal data from the internet, these companies actively monitor and erase information from numerous websites, significantly reducing the risk of future identity theft.
Individuals should also monitor deposit account activity by requesting reports from services like ChexSystems and Early Warning Services. It is essential to look for unauthorized entries and consider adding security alerts or freezes to these accounts as well.
Even if banks cannot share specific details about fraudulent attempts, it is advisable to request documentation of these incidents to flag future attempts. Victims should remain vigilant for unexpected debit cards, 1099 forms, or bank statements, as these may indicate that criminals have succeeded elsewhere.
In summary, deposit account fraud operates outside traditional credit systems, making it particularly confusing for victims. However, understanding the motivations behind these fraudulent activities and taking swift action can help individuals regain control of their identities and mitigate the risks associated with identity theft.
For further information and tips on protecting yourself from identity theft, visit CyberGuy.com.