Imagine you receive a letter informing you that unauthorized credit card transactions were charged in your name. You call to report the issue only to discover that you are a victim of new account fraud, in which someone stealing your identity opens an illegitimate bank, loan or credit card account to incur fraudulent charges in your name. These accounts are rarely reported and can lead to large financial losses and serious legal problems.
Criminals targeting new account fraud attack a variety of industries and services, including online banking, iGaming sites, dating websites, e-commerce platforms, financial institutions and mortgage companies. These criminals use stolen or synthetic identities to commit fraud, leaving victims facing huge monetary losses and legal troubles.
Defending the Digital Frontier: Understanding and Preventing New Account Fraud
New account fraud is often committed within the first 90 days of an account’s opening, giving fraudsters time to make deposits and withdrawals to avoid detection and to establish a legitimate pattern of activity. This gives fraudsters a higher chance of avoiding chargebacks and reducing their risk of prosecution.
To identify new account fraud, look for a mismatch between the address on the presented ID and the home address provided in the application. Fraudsters also provide their addresses or a real mail drop address to prevent the victim from receiving notifications related to the account. Similarly, look for applicants over 25 years of age without any history of financial transactions on their credit bureau report or with other banks. This can indicate a fraudster is using an established social security number to open a new account.