The Tactic Of The Fraudsters

Fraudsters are sly and cruel and wreak millions of dollar damage to thousands of creditors. They use account holders who are oblivious to the fact that they are being used, to steal money from creditors. Now that credit cards are so much more secure against fraud, the fraudsters went on to create greater schemes of creating fraud identities.

Synthetic Identity Fraud

Equifax has revealed that it is possible for fraudsters to create synthetic credit reports by creating a synthetic identity. All the fraudster needs is a social security number as a starter. They can then create a bluff address, date of birth, and name. How is that done?

Authorized User Abuse

First, to bring this identity into the credit world, the fraudster applies for a credit card under the synthetic identity. The bank declines the application since the identity information provided does not truly exist. Even so, a credit profile is created, as required by the Fair Credit Reporting Act when one applies for credit. Because of the credit profile, the synthetic identity person is now an official name on record.

Now, the fraudster adds the synthetic person as an authorized user to an existing, proper account holder. The fraudster can then go ahead and get approved for a first credit card. The fraudster will keep the account in good standing. And slowly get approved for many more credit cards. Many months later, it can be even 2 years after, that the fraudster will “burst out”. He will now go wild and spend huge amounts of money on all of the accounts he created under bluff names.

The Damage To The Creditor

The fraudster maxes out all the accounts stealing thousands of dollars. When the creditors suddenly jump up at this madness, they have no one to blame because the charges and accounts are all under synthetic identities, bluff, fake people. The creditors are left with millions of dollars in losses with no one to take responsibility.

There are thousands of fraudsters out there and they each create multiple accounts. This results in huge amounts of money in losses. The numbers are increasing too, as time goes by. Aite Group estimated that U.S. losses from bust-out fraud will soar from $580 million in 2015 to $1.25 billion in 2020.

The Red Flags

To try and prevent all this from happening, creditors and organizations keep their eyes wide open. The fraud departments lookout for some of these red flags to identity fraud.

  • Little SSN verification evidence
  • No proof of life evidence shared SSN
  • Way too much monitoring of credit
  • No utility or phone bills
  • No relatives
  • Too many changes of address (an average good consumer changes their address only once on 70 months while a bad guy changes their address once in 10 months)
  • No court appearances
  • No documentary
  • No employment history
  • Too many authorized users being added within a short amount of time
  • Too many mismatches in identity
  • Interesting behavior patterns
  • No matching email or social media accounts

When too many of the pointers above are existent or non-existent, fraud departments realize something fishy is going on. Who is this person? Why can’t he verify his identity properly? Has he never paid any bills? Why so many authorized users (which is the tactic fraudsters use to get their synthetic people out on the credit market)? Banks, issuers, or whoever it may be, will at this point investigate very deep to find out if identity fraud or synthetic identity fraud is the case here.

Prove Yourself Innocent

You may be a good and honest consumer but still, show red flags like a fraudster. No one wants that to happen to them. The trick is to keep away from as many of the red flags pointed out above. This way you don’t look suspicious to creditors and fraud departments don’t have to check in on you to make sure things are authentic.

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