Criminals Exploit Deposit Accounts to Test Stolen Identities, Leaving Victims in the Dark
CLINTON, Pa. — As identity theft evolves beyond credit card fraud and loan scams, criminals are increasingly opening deposit accounts in victims’ names to test the validity of stolen personal data. This emerging tactic, which often goes unnoticed by consumers, is raising alarms among cybersecurity experts and financial institutions alike.
Brian, a resident of Clinton, Pennsylvania, recently experienced this firsthand when two separate banks notified him that someone had attempted to open deposit accounts using his identity. Both applications were denied, but neither bank would disclose details about the information submitted or the reasons for rejection. “One bank told me they could not share any information due to privacy policy, and the other said they do not save information from declined applications from non-customers,” Brian explained in an email to Fox News.
This lack of transparency is common, as banks adhere to strict privacy regulations that prevent them from sharing sensitive data about failed applications. Additionally, deposit accounts are not reported to credit bureaus in the same way credit lines are, leaving victims with limited tools to monitor or respond to such fraud attempts. The Consumer Financial Protection Bureau notes that deposit accounts are often overlooked in traditional identity theft protection strategies, which focus primarily on credit accounts.
Experts warn that criminals use these deposit accounts as a testing ground to verify stolen identities. Because opening a checking or savings account typically involves fewer credit checks, fraudsters can quickly determine which personal data sets are valid. Once confirmed, they may proceed to open credit lines or create synthetic identities that blend real and fabricated information, enabling more damaging financial crimes.
“Fraudsters want to see if your data passes early verification steps,” said cybersecurity analyst Kurt Knutsson. “They use deposit accounts to launder stolen funds, receive payments from scams, unemployment fraud, or tax refund theft, and set up future attacks.” This methodical approach allows criminals to build confidence in their stolen identities before launching larger-scale fraud.
Financial institutions, meanwhile, face a delicate balancing act. While they strive to protect consumer privacy, their policies can inadvertently hinder victims’ ability to respond effectively. The Federal Deposit Insurance Corporation requires banks to maintain confidentiality, and many banks do not retain data from declined applications, limiting the trail of evidence available to victims.
Victims like Brian have resorted to placing fraud alerts with credit reporting agencies, but these measures offer little protection against deposit account fraud. Unlike credit accounts, deposit accounts are not consistently tracked by credit bureaus, and services like Early Warning Services rely on voluntary reporting by banks, which is not comprehensive.
Authorities urge consumers to remain vigilant and monitor all financial activities closely. The Federal Trade Commission recommends regularly checking bank statements, reviewing credit reports, and promptly reporting suspicious activity. Experts also advise contacting banks directly if notified of any attempted account openings and considering identity theft protection services that include deposit account monitoring.
As criminals refine their techniques, understanding the risks of deposit account fraud is crucial. Consumers must recognize that identity theft now extends beyond traditional credit fraud, requiring new strategies to safeguard personal information and financial health.
Leave a Reply