New ID Theft–Millions of Persons who Apply for Credit Who Don’t Exist
The Wall Street Journal on March 6, 2018, has a report on the latest ID theft scam. A fraudster applies for credit for someone who does not exist. Fraudsters start the process of creating a fake person in the records of the credit bureaus by asking a creditor for credit using a fake name and a social security number that has not been assigned or a number assigned to a child whose identity has not not made it into the credit files. Such fake numbers are known as “credit-profile” numbers or CPNs.
Once a creditor grants the fake person credit, the creditor reports an account to the credit bureaus in the fake person’s name and now the credit agencies have credit files on a fake person. Once the credit files are established, it is fairly easy for fraudsters to obtain credit cards and other forms of credit in that person’s name.
While the fake person probably won’t get a high-spending-limit card without a repayment history, lenders who provide low-limit cards often take chances on newer borrowers. Some identity fabricators pay bills promptly to qualify for higher limits, then “bust out,” running up the maximum charge.
The WSJ explains how one crook in Atlanta got $350,000 by submitting CPNs on 300 fictional people using phony merchant accounts. After Capitol One suspected fraudulent activity, they reported it to the US Postal Inspection Service. After an investigation, the individual was arrested. He pled guilty to wire fraud. A federal charge sentenced him to 46 months in prison.
TransUnion’s Mr. Cookman says it informs lenders when applicant information is consistent with synthetic fraud—an address associated with more than 200 people, say. Experian last year introduced a score alerting lenders if an applicant exhibits characteristics of a synthetic fraudster. TransUnion introduced a similar service in 2015.