What is New Account Fraud?
New account fraud refers to financial identity theft in which the victim’s personal identifying information and good credit standing are used to create new accounts, which are then used to obtain products and services. Stolen Social Security numbers are often used to commit new account fraud.
Since the thief typically submits a different mailing address when applying for new accounts, the victim never receives the bills and may remain unaware of their existence until creditors come seeking payment for debts the thief has accumulated in the victim’s name.
Variations on new account fraud include:
Utility fraud, in which the identity thief opens new utility accounts, such as gas, electric, phone, or cable, in the victim’s name, accounts for as much as 20% of all instances of identity theft.
Loan fraud accounts for approximately 10% of instances of identity theft. In order to obtain a loan of any kind, applicants are nearly always required to provide a Social Security number.
Credit card fraud is the most lucrative type of new account fraud, and the most prevalent, accounting for almost half of all identity theft cases. Simply put, identity thieves love credit cards because they are the easiest accounts to open, and they can quickly be turned into cash.
The availability of instant credit means instant identity theft. Identity thieves froth at the mouth when they obtain personal identification information and are in range of a major retailer.
An identity theft protection service can help mitigate the risk of new account fraud by monitoring your credit for new account activity, as well as by monitoring the Internet for your personal information.
One cool company that’s watching your back is iovation. iovation spots cyber criminals by analyzing the device reputation of the computers they use to connect to a website. They investigate for suspicious history and check for characteristics consistent with fraudulent users. And the best part is that iovation can prevent a criminal from using stolen data to open a new account in the first place.
According to Scott Waddell, Vice President of Technology at iovation Inc., “iovation sees identity thieves carry out their attacks in very short-time windows to exploit their newly stolen credentials. What might typically look like one transaction to a single business is often a shotgun attack across our globally shared view. One device may be opening a new credit card account, then going to an online retailer, then applying for instant credit all within minutes, and iovation can detect that through velocity triggers and shared experience across subscribers to alert the affected businesses and thwart the attacks. That’s great for the protected businesses and for the consumers who would otherwise be dealing with fraudulent charges made under their identities.”