Javelin reports 31% rise in new-account identity fraud victims

Unlike traditional identity theft, where criminals access existing bank accounts or credit cards, new-account fraud involves using a victim's name, Social Security number, birthdate, or other personal information to open a brand-new account. These fraudulent accounts can range from credit cards sent to unfamiliar addresses to phone, utility, or buy now, pay later services with companies the victim has never used.

The Federal Reserve has warned that digital account openings create new opportunities for fraudsters, particularly as stolen personal information and sophisticated technology become more accessible. Criminals often combine data from multiple breaches, phishing attacks, or data broker records to build a complete picture of an identity. Because the criminal may never touch an account the victim already monitors, suspicious charges may not appear on standard bank statements. Victims often discover the fraud only when a strange bill arrives, a lender checks their credit, or a debt collector makes contact.

To mitigate risk, consumers should review credit reports from Equifax, Experian, and TransUnion via AnnualCreditReport.com. Free reports are currently available weekly. While credit reports are a primary tool, not all types of accounts, such as some phone or utility services, appear on these reports. A credit freeze can make it harder for criminals to open new credit accounts by restricting lender access to the frozen report. Freezes are free to place and lift, do not hurt credit scores, and must be contacted separately for each of the three major bureaus.

If unrecognized accounts are discovered, a six-step response process is recommended. First, consumers should call the company's fraud department to close or freeze the account and keep confirmation. Second, they should create an Identity Theft Report and recovery plan at IdentityTheft.gov. Third, placing a fraud alert requires contacting only one major credit bureau, which must then notify the other two; this alert lasts one year. Fourth, a credit freeze provides further restriction by limiting access to the credit report entirely.

Fifth, consumers must contact any credit bureau showing the fraudulent account to block identity-theft information. This process requires sending the bureau a copy of the FTC Identity Theft Report, proof of identity, and a letter identifying the fraudulent information. Alternatively, inaccurate information can be disputed directly with the bureau. Sixth, consumers should turn on account alerts from banks and credit card companies and consider identity theft monitoring services to watch for new inquiries or accounts.

Speed is critical in resolving identity theft. A fraudulent account left unnoticed can lead to damaged credit and collections. Keeping detailed records of all contacts, letters, case numbers, and submissions is recommended to aid in follow-up efforts.