Why Would Someone Fraudulently Open a Bank Account in Your Name?
Thieves may open a bank account in your name for many reasons. They may want to access your credit, launder money, evade taxes, or commit check fraud.
For one British Columbia man, thieves created a bank account in his name for all of the above reasons [*]. It started with a strange piece of mail. "We open the mail and see this client card for a bank account we did not open," his wife said. Later, they discovered that the scammer had registered to have Coronavirus relief checks sent to the fraudulent new account.
6 Signs of an Unlawful Bank Account in Your Name
When not detected and dealt with early enough, bank fraud is accompanied by serious consequences. While you can often dispute and redeem fraudulent attacks on your finances and credit, the process can be tedious. Worst of all, bank reimbursements are never guaranteed.
To make sure you’re not liable for unlawful transactions, pay attention to these red flags that signal illicit accounts in your name.
- Mail or emails from an unfamiliar bank. While banks send offers for new credit cards and lines of credit all the time, not all promotions should be disregarded as junk mail. If you get a welcome letter, promotional offer, or bank statement from an unfamiliar institution, check to make sure that they don't have an account in your name.
- Receiving strange product or warranty information. If you receive information about products or services you didn't purchase, it's possible that you've been victimized by some form of fraudulent activity, such as identity fraud.
- Unauthorized transactions on your credit report. Always look for irregularities in your credit file, such as unexpected hard inquiries, accounts, and balances. While bank accounts themselves won't appear, unpaid bank fees and penalties and new credit card accounts will.
- You’re denied credit or offered unfavorable terms. New and unauthorized accounts can influence your credit score. If you apply for new credit and receive terms that don't corroborate with your real credit history, look for an explanation. Criminals may have opened a new credit account in your name, raised your debt-to-income ratio, and/or missed payments — causing your credit score to plummet.
- Calls or letters from debt collectors. When debt collectors go looking for payment, they often refer to the address and number in your credit file. If you receive a call for a debt that you don't own, it could be a scam or a forewarning to identity theft.
- You've been alerted to a data breach. New rules from the Securities and Exchange Commission (SEC) demand that all public companies disclose any data breaches [*]. If you ever receive a breach notification, you could become a victim of identity theft.
What To Do and How To Report Fraud
When and how you respond could be the difference between swift justice and financial unraveling. To report bank account fraud, place a fraud alert on your account, obtain your credit report, and file an identity theft report with the FTC.
Another example is an unauthorized transaction made by using your debit card number. This needs to be reported within 60 days of the bank statement being sent to you [*].
- Place a fraud alert
- Review your credit report
- Obtain your checking account report
- Close fraudulent accounts, protect existing accounts
- Report to the FTC
- Dispute all new and errant bank accounts
- Extend your fraud alert
- File a police report
1. Place a fraud alert
A fraud alert is a free notification on your credit file that informs creditors to take extra precautions before opening new accounts in your name or extending credit on your existing accounts.
Fraud alerts make excellent first steps in these situations because they go into effect the same day you order them and require only one phone call.
How to activate a fraud alert:
- Call one of the credit bureaus. Contact either Equifax (800-685-1111), Experian (888-397-3742), or TransUnion (888-909-8872).
- Request a fraud alert. The alert will be placed with that agency the same day, while the remaining bureaus will be informed of the alert and initiate it within 24 hours.
- Provide proof of identity. You will need to supply documentation proving your identity, such as a government ID, verification of your Social Security number (SSN), and documentation that includes your contact information and address.
Note: Once implemented, fraud alerts remain in place for one year or until you remove them. While powerful tools, fraud alerts only add extra verification steps for lenders, such as credit card issuers. If you want more rigid controls added to your file, consider a credit freeze.
2. Review your credit report
Credit reports document the history of your credit accounts, including limits, payments, and balances. Creditors and lenders share information with national credit reporting companies. They then use this information to make decisions on new credit applications.
Per the Fair Credit Reporting Act (FCRA), you are entitled to one free credit report every 12 months from each of the three major bureaus. Until the end of December 2023, everyone in the United States can also obtain free credit reports each week from the three credit bureaus by visiting AnnualCreditReport.com [*].
What to look for in your credit reports:
- Look for mistakes in your personal information. If someone has applied for a new account in your name, they may have changed your personal information on file — such as your address, phone number, or employer. If a bank has changed these details, it could appear on your credit report.
- Verify collection agency accounts and public records. Make sure you recognize the listed collection agency accounts and public records, such as any bankruptcies.
- Investigate the account information. Ensure that you recognize all of the accounts listed and that the statuses are correct. Look carefully at the details of both adverse and satisfactory accounts.
- Go through the hard inquiries. Double-check every hard inquiry on file, which covers all of your credit applications. If something looks unfamiliar, call the inquirer to obtain specifics.
Note: Since creditors are only required to report to one reporting agency, you should review reports from all three major bureaus. If you’ve placed a fraud alert on your credit file, you’re eligible for yet another free credit report.
⛳️ Related: How to Recognize & Avoid Credit Repair Scams →
3. Obtain your checking account report
Like a credit report, which documents your credit history, a checking account report has the details of your banking history.
Checking account reporting companies collect and share this information with financial institutions. When you apply for a new account, your bank analyzes your transaction tendencies, overdrafts, and unpaid fees.
According to the Consumer Financial Protection Bureau (CFPB), you are entitled to a free copy of your checking account report every year [*].
How to get a checking account report:
- Contact a nationwide checking account reporting company. You can call any of the following: ChexSystems (800-428-9623), Early Warning Services (800-325-7775), or Telecheck (800-366-2425).
- Request your free report. While the nationwide agencies must provide you with a free report, other reporting agencies may charge a fee. To get full coverage of your banking history, you may need to request reports from multiple organizations.
- Ask the bank for an adverse action notice. If an account application was denied to you, the bank must inform you of the checking account reporting agency they polled. This will let you know which company to contact.
4. Close fraudulent accounts and protect existing accounts
Every bank has its own internal process for managing hacked bank accounts and bank scams, but you should have the authority to close a fraudulent account if it's in your name. This will put a stop to any further transactions coming from that account.
How to protect existing accounts:
- Change and strengthen your passwords. Combine words and special characters to create longer and more complex passwords. Avoid using personal information or common words and phrases.
- Add security questions (if applicable). Consider using open-ended security questions with memorable answers that won't change over time.
- Enable two-factor authentication (2FA). This adds an extra step to the verification process and reduces the chances of someone hacking your account.
- Avoid online traps. Be on the lookout for different types of phishing scams on social media and via email. Fraudsters use many tactics to pilfer banking information — including fake websites, bogus job offers, and by posing as government officials.
5. Report to the FTC
To support victims of identity theft, the Federal Trade Commission (FTC) launched fraud and identity theft resource pages with helpful guides, checklists, and forms for reporting and recovering from these crimes. The FTC does not investigate fraud itself, but it aids organizations and law enforcement in their efforts.
If you suspect your identity has been compromised, reach out to the FTC immediately.
How to file an FTC report:
- Contact the FTC. To file an identity theft report, visit identitytheft.gov or call 1-877-ID-THEFT (1-877-438-4338). You need to identify yourself with government identification and your SSN.
- Obtain an identity theft affidavit. When you file an identity theft report/complaint to the FTC, your information and the details of the crime go into an official affidavit [*]. In most cases, you need an FTC affidavit to report theft or fraud to banks, credit reporting agencies, and law enforcement agencies.
- Secure sample letters. The FTC provides sample letters to submit to banks, credit reporting agencies, and other institutions. These will help you craft dispute letters to use in the step below.
6. Dispute errors and errant bank accounts
Once you file an FTC report, reverse any financial damages by lodging an official dispute. According to the FCRA, organizations must investigate any consumer-disputed information [*].
Organizations may handle disputes differently, so you need to follow the appropriate next steps for your situation. The following steps highlight the general dispute guidelines.
How and where to file disputes:
- Contact the bank's fraud department. Reach out to any financial institutions that have fraudulent accounts in your name. It's possible that the bank can handle this internally; they will likely require an official FTC affidavit and dispute letter. Check back after at least 15 days to see what progress has been made.
- Dispute the checking account report. If the bank can't settle your dispute, approach the checking account reporting company that compiled the report with the fraudulent account [*]. If they do not remove the errors, you can add a statement to your checking account report that explains why you believe certain entries are fraudulent.
- Send dispute letters to all major credit reporting agencies. If the above steps do not resolve the situation, file an official dispute with the credit reporting agencies. This will trigger an investigation. They will also block any erroneous information on your credit report within four days and provide you with a full response within 30 days of receiving your dispute letter.
- File a complaint with the Consumer Financial Protection Bureau (CFPB). If the organizations above do not provide adequate recourse, issue a complaint with the CFPB. They will send your complaint to the offending company — typically eliciting a response within 15 days. You will be given 60 days to respond, and your complaint will be published in the CFPB Consumer Complaint Database.
Note: Whenever possible, use written communications in disputes and keep copies for your records.
7. Extend your fraud alert
After it has been determined that your identity has been stolen and you have filed an FTC complaint, you can extend your fraud alert, which lasts for seven years.
Like initial fraud alerts, you need only request an extended fraud alert with one of the major credit bureaus. Alerts from the other two will follow automatically.
Benefits of an extended fraud alert:
- Receive an additional credit report. With an extended fraud alert, you qualify for two free annual credit reports from each of three major bureaus.
- Blocks unsolicited credit promotions. Your name will be removed from unsolicited credit and insurance offers for five years.
Note: You may also opt for a security or credit freeze, which fully blocks anyone from accessing new credit under your name (even you). Credit freezes are password-protected and may be temporarily lifted each time you want to access credit.
8. File a police report
After you follow the above steps, you may choose to file a police report. While your local law enforcement may look into identity theft accusations, they often require hard evidence to launch a substantial investigation. For example, if you know or think that you know who opened a bank account in your name, contact the police.
What you need to bring in order to file a police report:
- The FTC affidavit
- Government identification
- Proof of address
- Proof of identity theft
- Any further evidence
Note: Be sure to get a copy of the police report for your records.
Protect Your Identity — With Aura
If you're not careful, identity thieves can emerge silently and disappear before you discover you’ve been targeted. They can open bank accounts in your name, change your address, and take over your online accounts.
Along with the suggestions provided above, follow these tips to keep your identity safe.
- Protect your information. Scammers don't need much to commit fraud. With just an account number, they can steal your money — so avoid sharing any personal information unless you're using a secure website or app that you trust.
- Keep an eye on your mail. Thieves may reroute your mail to another address or P.O. box. Pay attention to the frequency of your mail, verify your address with the United States Postal Service (USPS), and consider registering for informed delivery. Fraud victims can also freeze change-of-address requests for up to six months [*].
- Secure your online accounts. Enhance your passwords and enable 2FA across all eligible online accounts.
- Watch out for scams. Be suspicious of any calls and emails requesting information, and educate yourself about the latest scams in order to best avoid falling for them.
- Invest in your digital security. Consider signing up for antivirus software, a virtual private network (VPN), and Safe Browsing tools to get the most protection while you conduct online business and leisure activities.
If you can manage all of these things, you'll vastly improve your defenses against hackers and scammers. For even more security and peace of mind, consider Aura’s all-in-one solution.
Along with a password manager, antivirus software, and VPN, Aura offers fraud remediation, three-bureau credit monitoring, $1 million in identity theft insurance coverage, and 24/7 U.S.-based customer support to keep you and your family protected when you need it most.