Identity theft is evolving, and it’s impacting individuals in unexpected ways. Criminals are branching out from traditional credit card and loan scams to applying for savings accounts under stolen identities. This can leave victims bewildered about what steps to take next. A recent case from Brian in Clinton, Pennsylvania, highlights this issue. He shared his experience with us:
“I found out from two banks that someone tried to open a savings account in my name. Both rejected the applications and notified me. One used email, while the other mailed a letter. I understand why someone might want to open a credit account, but why a deposit account? One bank claimed they couldn’t disclose details due to privacy policies, while another stated they don’t retain info on rejected applications from non-customers. Why don’t banks keep or share information about these? As far as I know, credit bureaus don’t track deposit accounts, and early warning services only report what banks choose to share. So, what should I do if someone keeps trying to open a savings account using my name? I’ve issued a one-year fraud warning with the credit bureaus, but I’m not sure that will protect me against deposit account fraud. Any guidance would be appreciated. Thank you.” Brian, Clinton, Pennsylvania
Your concerns are valid. Deposit account fraud is on the rise as criminals create synthetic identities and test out stolen data. When someone applies for a banking account using your name, it gives them insight into what personal information is effective and what isn’t, which can lead to more serious attacks down the line.
Reasons Criminals Open Savings Accounts
Criminals have several strategic motivations for starting savings accounts that help them evaluate stolen data and plan larger schemes.
Testing Stolen Information
Scammers often use savings accounts for initial validation, as the approval process is usually less tied to credit checks. They’re basically experimenting to see if their data passes the first hurdles.
Money Laundering
New savings accounts are essential for laundering funds and receiving payments related to various fraud schemes, including unemployment fraud and tax refund theft.
Facilitating Future Attacks
If they confirm your identity works, they can open credit lines or create synthetic identities by blending your real information with fabricated data.
Why Banks Don’t Share Information
Under federal privacy laws, banks are restricted in what they can disclose about applications, even when these applications violate your identity. Many banks tend to:
- Quickly eliminate rejected applications to limit their exposure to unnecessary data.
- Utilize external validation services where your data is held outside the institution.
- Require a subpoena to share IP addresses with law enforcement, and these won’t be provided unless legally mandated in an active investigation.
While IP addresses can aid in identifying fraudsters, banks won’t disclose them unless there’s a compelling legal reason.
Protecting Yourself From Deposit Account Fraud
Taking proactive measures can help you safeguard your identity and lessen the chances of future misuse.
1) Consider ID Monitoring
Deposit account fraud often escapes the radar of standard credit monitoring. Services that keep an eye on your bank accounts and activities on the dark web offer extra protection. Identity theft firms can monitor your Social Security Number, phone number, and email to alert you if your information gets sold on the dark web or is used to open new accounts. They can also assist in freezing accounts to prevent further misuse.
2) File an FTC Identity Theft Report
Visit IdentityTheft.gov to create a formal report, which can be useful if you have to approach local law enforcement later.
3) Set Up Stronger Alerts or Freezes
Brian, while you already have a one-year fraud alert, it might be worth upgrading to a seven-year option. Additionally, consider freezing your credit with Equifax, Experian, and TransUnion to block new credit lines from being opened.
4) Utilize a Data Deletion Service
These services clean up personal information from public records that criminals may use to create fake identities. While complete data removal isn’t guaranteed, such services actively monitor and remove your information from hundreds of websites, significantly reducing your data exposure.
5) Check ChexSystems and Early Warning Services
These agencies track deposit account activities. Request a report at chexsystems.com and earlywarning.com to search for fraudulent entries. Adding security alerts or freezes might be beneficial.
6) Notify Your Bank
Even if they can’t share specific details, ensure they note your situation to stay vigilant against any future fraudulent activity.
7) Monitor Your Email
Keep an eye out for unexpected debit cards, 1099 forms, or other banking documents that may signal criminal activity.
Next Steps
Document every letter and email from your bank. Complete an FTC report to use if you need to file with the police. Review your reports from ChexSystems and early warning services and apply any available freezes to hinder criminal access.
Key Takeaways
Fraud involving savings accounts can be intricate, as it operates outside the usual credit system. However, the intent is straightforward; criminals aim to see which stolen identities clear initial vetting, paving the way for larger schemes. By taking some straightforward steps, you can protect yourself and reclaim control over your identity.
