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Identity theft is now hitting people in sneaky ways. Criminals no longer stop at credit cards or loans.
They verify stolen personal data by applying for deposit accounts under your name, which confuses many victims and leaves them unsure of how to react. Brian from Clinton, Pennsylvania recently experienced this twice in one week. Here is the letter he sent us:
“I was recently notified by two different banking institutions that someone had filled out an online application for a deposit account in my name. Both banks rejected the applications and sent me notices. One bank sent an email and the other a letter. Neither bank would provide me with any information about what information was submitted or why the applications were rejected. I understand why scammers try to open credit accounts, but why would they try to open deposit accounts? One bank told me they couldn't share any information with me about failed application due to privacy policy, and another bank said yes, it does not retain any information about rejected applications from non-customers.
Why don't banking institutions collect and share information about rejected online applications? As far as I know, the credit bureaus do not collect information on deposit accounts, and the Early Warning Service only has information from banks that voluntarily report to them. So, how should I react or respond to someone trying to open deposit accounts in my name? I have put a fraud alert on the credit bureaus for one year, but I don't believe that will help me if someone tries to open a deposit account. Any help or advice would be greatly appreciated. Thank you.” Bryan, Clinton, Pennsylvania
You are right to take this seriously. Deposit account fraud is growing rapidly as criminals create artificial identities and verify stolen data. When thieves apply to open a checking or savings account in your name, they collect information about which stolen identities work and which don't. This gives them the opportunity to launch more destructive attacks later.
THEFT OF STATIONARY PERSONAL LICENSES RESULTS IN MAJOR BANKING FRAUD
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Why do criminals open deposit accounts?
Criminals use deposit accounts for several strategic reasons that help them verify stolen data and prepare larger attacks.
Testing stolen data
Fraudsters often start with deposit accounts because the approval process may be less tied to a credit check. They want to know if your details have passed the early review.
Moving Stolen Money
The new deposit account helps criminals launder funds or receive payments related to fraud, unemployment fraud or theft of tax refunds.
Setting up future attacks
Once they confirm that your identity can be used, they may open credit lines or create a synthetic profile that mixes your real data with fake data.
Why don't banks share details?
Banks adhere to strict confidentiality rules according to federal law. These rules limit the information they can share about any app, even if it abuses your identity. Many banks:
- Quickly clean up rejected apps to reduce their exposure to unnecessary data
- Use external verification services which store data outside the bank
- Request a subpoena before turning over IP addresses to law enforcement
Although an IP address can help identify a fraudster, banks will not disclose it without a legal request related to an active investigation.
How to protect yourself from deposit account fraud
Take these steps now to lock down your identity and reduce the chance that a criminal will misuse your information again.
1) Consider personality monitoring
Deposit account fraud often goes beyond normal credit monitoring. A service that monitors bank accounts and dark web activity provides additional protection. Identity theft companies can track personal information such as your Social Security Number (SSN), phone number, and email address and alert you if it is sold on the dark web or used to open an account. They can also help you with freeze your bank and credit card accounts to prevent further unauthorized use by criminals.
Check out my tips and best practices on how to protect yourself from identity theft V Cyberguy.com.
2) File an identity theft report with the Federal Trade Commission.
Go to IdentityTheft.gov and fill out the report. It creates an official record that you can use if you need to file a local report. police report Later.
3) Add stronger alerts or freezes.
Brian, you have already posted a one year fraud alert, but you can upgrade to a seven year fraud alert. You can also freeze your credit with Equifax, Experian and TransUnion to prevent new lines of credit from opening.
4) Use a data removal service
The data removal service removes your personal data from people search sites, which criminals often use to create artificial identities. This reduces the amount of your information that can be used in future attacks.
While no service can guarantee complete removal of your data from the internet, a data removal service is indeed a smart choice. They don't come cheap, and neither does your privacy. These services do all the work for you, actively monitoring and systematically removing your personal information from hundreds of websites. This is what gives me peace of mind and has proven to be the most effective way to erase your personal data from the internet. By limiting the information available, you reduce the risk that scammers will link leaked data to information they can find on the dark web, making it harder for them to target you.
Check out my top data removal services and get a free scan to see if your personal information has already been published online by visiting Cyberguy.com.
Get a free scan to see if your personal information has already been published online: Cyberguy.com.
5) Check out ChexSystems and early warning services.
These companies monitor deposit account activity. Request reports at chexsystems.com and earlywarning.com. Look for unauthorized entries and add security alerts or block both.
6) Notify banks
Even if they can't share details, ask them to put the attack on your file. This helps detect future fraud attempts.
7) Keep track of your email
Find debit cards, 1099 forms, or bank statements you didn't request. They often show when criminals are making progress elsewhere.
Next steps
Print out every letter or email from banks. Complete a Federal Trade Commission report and use it if you need to file a police report. Review ChexSystems and Early Warning reports and add blocking where possible to make your identity less useful to criminals.
Kurt's key takeaways
Deposit account fraud seems confusing because it operates outside of traditional credit systems. However, the goal is simple. Criminals want to see which stolen identities are pre-screened so they can launch larger attacks later. A few quick steps can close that door and give you back control.
What other questions about identity theft and online banking security would you like us to answer? Let us know by writing to us at Cyberguy.com.
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