#11 New Loan Fraud
According to the Federal Trade Commission, new loan fraud has been increasing dramatically year after year. In fact, Federal student loan fraud, which is the fastest growing form of identity theft, is up over 188% from the year prior.
New Loan Fraud occurs when someone uses your personal information to open a new loan account without their intention to ever repay the money they borrowed in your name. This is one type of identity theft that in some circumstances can be tracked by the credit bureaus, but the downside is that when someone takes out a loan in your name, you usually don’t see it until after the damage is done.
Many lending companies only need a limited amount of detail about you in their streamlined loan application process. This makes it simple for identity thieves to use the victim’s stolen information – from a Social Security number to banking information – to ultimately get a quick loan. Payday loans make it convenient for criminals to receive cash on your behalf with no verification protections. What is even worse is that with enough stolen information, a vehicle, home, personal, or business loan can be obtained in your name.
New loan fraud can affect you in ways that you may not expect:
- The lenders will expect to be paid by the person on the loan – even if you are a victim
- If you do not pay, the loan will go to collections
- Your credit score will drop dramatically
- Without proper help, you will likely spend hours trying to prove your innocence to the lender
- If you try to prove your innocence to the lender yourself, you will likely have to do it during working hours which means money lost due to reduced productivity so that you sacrifice compensation that should have been in your pocket
- You may be denied when you apply to live in an apartment or condo since the delinquent loan will be on your credit record
- Having an unpaid loan debt on your record may even exclude you from getting a job for which you are otherwise qualified
LibertyID will take the following steps for/with their members:
- Contact the company where the new loan was established
- Make sure the fraudulent loan is removed from your credit report
- Place fraud alerts at all three credit reporting agencies
- File report with FTC
- File a police report
- Review credit reports with the victim to ensure there are no other types of fraud
- Provide credit monitoring with alerts for 12 months
- Periodically contact the member throughout the 12 months following resolution of their ID theft recovery case if warranted.