Thanks to the myriad data breaches happening literally every day, there are an influx of Social Security numbers for sale on the black market. It’s no surprise then that new account fraud (NAF), has risen.
New Account Fraud goes something like this: Basically, a criminal gets their hands on your Social Security number and personal information through a data breach, stolen mail, phishing scam or another of the many common ways and uses it to open new accounts (credit cards, cell phones, you name it) in your name. They then proceed to max out those cards, leaving your ruined credit in their wake. You might not know anything is amiss until a collection agency suddenly starts calling. It’s terrifying, and it happens more than you realize.
Who would you call if you learned it happened to you? Credit monitoring won’t prevent the problem and your insurance isn’t going to fix the damage left behind. On average it can take a victim up to 200 hours to clean up the mess. Sign up for an annual LibertyID subscription now and rest easy knowing our certified restoration specialists know just how to repair the damage.
So what accounts for the uptick in New Account Fraud? A study from the ITRC surmises that the widespread introduction of EMV-chip-enabled cards in the U.S. in 2015 made it “much more difficult for thieves to commit counterfeit card fraud (a form of existing credit card fraud) making new account fraud much more appealing as the lowest hanging fruit.” Meanwhile, the constant data breaches you read about in the news surely aren’t helping. According to a recent Javelin Strategy & Research report, one in five data breach victims suffered fraud.
Unfortunately, fraudsters have become better at evading detection, according to Javelin’s latest study, “with new-account fraud (NAF) victims being notably more likely to discover fraud through review of their credit report (15 percent) or when they were contacted by a debt collector (13 percent).”
New account fraud is also synonymous with full victim identity theft, which is essentially “when a suspect uses the victim’s identity to open new account(s),” according to Suzanne Ford, the lead restoration advocate for LibertyID. That’s in contrast to a fraud case, which is when the suspect breaches and manipulates a victim’s existing account to gain monetary benefits.
So how does new account fraud happen? In a variety of ways. If your Social Security number is part of a data breach, criminals can then piece together more identifying information about you and use it to apply for a loan or credit card in your name. Sometimes criminals will apply for a credit card in their victim’s name, and then manage to forward that person’s mail so that they can intercept the new cards coming in the mail. That means the victim will have no clue something is amiss.
New account fraud is just one type of identity theft. To read about other common types, visit our blog post.
So is there anything you can do to prevent becoming a victim?
While there are a few safeguards you can take, which we detail in this blogpost, sadly, there are plenty of people who do everything right, take all of the appropriate precautions and still have their identity stolen.
What is your plan?
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