The 31 Forms of Identity Theft – New Bank Account Fraud

#21 New Bank Account Fraud

New account fraud is when is when a criminal uses synthetic or stolen information in order to open new bank accounts in another person’s name. Their intention is to open the account and max out the credit limits associated with those accounts via their use of another person’s identity before the criminal disappears. The lifecycle of this process is usually only ninety days which makes it incredibly difficult for the banks to catch and stop before the criminal gets off with so much. 

New account fraud is so difficult to spot because if the applicant’s credit report looks good, then the banks don’t usually look much deeper into it. Usually what happens is that a criminal purchases parts of a person’s identity on the dark web for as little as $20 and then they fabricate the rest of the needed information about the victim. 

What steps are banks taking to reduce the impact of new account fraud?

Banks are working to find a balance between offering a frictionless onboarding process for prospective new customers and preventing fraudulent activity. Many banks are implementing a multi-layered security approach. Under this approach, when someone comes into the bank branch to open a new account, there are fifteen red flags that the bank looks at in their attempt to reduce the number of those affected by identity theft. 

Some of the red flags that many banks are on the lookout for include: 

  • Primary identification issued within the last 60 days
  • Applicant’s address is not in the same region in which the financial institution is located
  • The original deposit is a small amount of cash – usually less than $500
  • An applicant over 25 years old with little to no previous financial history. Applicant uses a drop mail address instead of a physical residence

Credit monitoring may not alert you to this type of fraud.

LibertyID will take the following steps for/with their members:

  • Contact impacted financial institution where their information was misused and have the fraudulent accounts closed and note the presence of identity theft
  • Place fraud alerts at all three credit reporting agencies
  • Place credit freezes at all three credit reporting agencies, if appropriate
  • File report with FTC
  • If their identity theft involved the use of your driver’s license number, Social Security Number, or another type of identification, will we contact the relevant agencies to notify them of the theft
  • Review credit reports with the victim to ensure there is no other types of fraud
  • Provide single bureau credit monitoring with alerts for 12 months
  • LibertyID will ensure that the restoration is completed with the victim
  • Periodically contact the member throughout the 12 months following resolution of their ID theft recovery case if warranted