Bank fraud, scams & identity theft prevention and detection
Bank fraud and identity theft can happen on a large, global scale, but it can also happen to individuals. It’s a very real threat that can happen to anyone. For instance, legal entities can consider sharing your debit card PIN with someone as fraud. According to the Identity Theft Resource Center, the most common types of fraud in 2017 included credit card, bank, and loan fraud. There was a reported $905 million in total fraud losses in 2017. Fraudsters seem to prefer their initial method of contact to be by phone, as 70% of cases were initiated this way. Websites were the second most popular contact method at 8%. Fraud prevention and awareness will help keep your identity, and your money, safe. We will review how data breaches happen, how criminals use your information once stolen, how to avoid scams, fraud and id theft, what to do if you suspect fraud or identity theft has happened, and how children and elderly are also targets.
How Criminals Obtain Your Information
Criminals are smart and are only getting smarter. Their one goal is to steal your identity and commit fraud for their gain. A lot of money can be made by motivated buyers on the black market, or through illegal means, that can use that information to their favor and without concern for the victim.
- Phishing Scams. Our email inboxes are loaded with spam and potential fraud attempts. Identity thieves will send you emails that look harmless but are actually ploys to get you to give them your information. Always check for discrepancies like a misspelled email address, a “from” address that doesn’t match who they say they are, external links to an unfamiliar webpage and requests to enter your login information. Once they have access to your computer your information as well as your contact list has been compromised.
- Computer Hacking. The most sophisticated identity thieves will attack your network firewall to gain access to non-public information (NPI). This includes your full name, address, bank account numbers and transactions, email contacts, any information you have of friends, family and/or business associates, usernames and passwords and more.
- Debit/credit Card Skimmers. Criminals use a small device called a “skimmer” to steal debit and credit card information without you even knowing. The skimmer is often placed over the card reader on ATMs as well as gas pumps but can be placed on any type of card reader. As you enter your card the device “skims” the information from the card’s magnetic strip while allowing you to still make your transaction. The magnetic strip contains the card number, expiration date, and the cardholder’s full name. Enough information to cause some damage to your account by making a cloned card, making online purchases, or sell the information. Some criminals will even go as far as placing a small camera to capture you entering your PIN. A pad could even be placed over the machine’s PIN pad, though less likely since it could be slightly easier to detect.
- Juice Jacking. Similar to the skimmers mentioned above, juice jacking involves using an existing, seemingly legitimate port (in this case a USB port), to steal your data. Hackers are potentially able to install malware or copy data from devices plugged into public charging ports. Think about the last time you were stuck at an airport with a dying phone battery, you may have used on of their handy USB charging stations. While this could be fine, you still need to be aware of the dire possibilities.
- Stolen Mail. Simple yet effective. Think about what is in your mailbox. Your full name, address, bills and statements with account information, and other materials that might have your date of birth. Even junk mail like credit card and personal offers can suggest someone has good credit which makes them a good target for identity theft. Criminals want someone that they can exploit for their gain, what better candidate? All of this information can be put together to create a profile on you and determine possible phishing opportunities, which we will get to later.
- Social media mining. You can learn a lot about someone through social media. Like where they live, if they are going on vacation or on a business trip for an extended period of time, the names of friends and family, where you went to school. Information that can be used to gain trust while trying to use phishing tactics to steal your identity. Always be aware of your privacy settings and think hard about the information you share on social media.
- Telephone calls posing as legitimate companies or the government and asking for personal information. Don’t put it past the old adage “you never know until you ask” mentality. Identity thieves will call posing as a utility company, your bank, or even the government and will flat out ask you for personal information. Don’t be fooled. It is rare that a company will call you to ask for your account number.
As you can see, identity thieves will try anything to get your information. In their eyes, the reward outweighs the risk.
How Do Thieves Use Your Information?
There are many ways that identity thieves can use your personal information. Remember, the point is that they will be performing transactions as you, so, there are no limits on what they will try.
- Apply for a loan. With enough of your personal information, namely, your social security number, an identity thief can apply for a loan in your name hoping that an application will slip through the cracks. With online applications becoming more prominent it is easier for thieves to submit fraudulent applications. Luckily, there are plenty of procedures in place to catch these fake applications. For example, underwriters and loan specialists review the application as well as the credit report to make sure the information matches the information entered. Lenders will also still require proof of identification, pay stubs and other documentation to verify the application. Fraudulent applications may lower your credit score if a hard pull of your credit report is done during the application process. This is one of the many reasons it is important to periodically review your credit report for any fraudulent inquiries. If potential fraud is suspected an alert can be placed on your credit report from 3 months up to 7 years as a layer of security on your credit report.
- Fake tax returns. Identity thieves that have your social security number and your full name can attempt to file a tax report in your name. The desired outcome will be to receive YOUR tax refund. After filing your report, it is important to check your mail every day. The IRS will send a 5071C letter to you if they receive a tax return with your name and/or social security number that they suspect may not be from you. Another reason why getting your taxes done early is a benefit. There is less time for a fraudulent return submission.
Identity thieves that have your social security number and your full name can attempt to file a tax report in your name. The desired outcome will be to receive YOUR tax refund.
- Open a credit card. It’s easy to apply for a credit card. If an identity thief has your name and social security number they can at least submit an application and the card sent to their address. Think about how many credit card offers you get in the mail with a personalized offer code enclosed just for you. Now picture someone stealing that piece of mail and using your social security number to verify who you are. This is one reason why you should shred your junk mail that uses pre-filled or pre-approved information.
- Debit or credit card take over. If an identity thief has managed to steal all of your card information it is easy for them to start charging. This can also happen with businesses that might have multiple card holders making it easier for the transactions to go unchecked. A thief will start with a small amount to see if the transaction will go through. Not knowing what the account balance is they may try this a few times before going big and making large withdrawals or purchases. Small transactions can be overlooked since a lot of transaction verifications will use small amounts like when setting up a transfer between two of your accounts. Once the funds are gone, they are gone and a fraud dispute will need to be filed by you in order to get the money back. In most cases the culprit isn’t apprehended making it all the more worth the risk for the identity thief.
Avoid Fraud and Identity Theft
There are many ways to protect yourself from identity theft and fraud. It takes a bit of time and effort on your part but that pales in comparison to the effort needed to clean up the mess left by identity thieves.
- Check your credit report at least annually for any anomalies. You are entitled to one free credit report per year by each of the three credit bureaus; Experian, Transunion, and Equifax. If you see an account that you are unsure of, take note immediately. Many creditors may show up with their primary company name which may not be apparent at first. A quick Google search should help clear up most confusions. There may also be a phone number listed on the credit report that you can call to find out more information to verify the legitimacy of the account. If an account does turn out to be fraudulent, dispute it immediately. Time is a factor and you should not delay taking action.
You are entitled to one free credit report per year by each of the three credit bureaus.
- Keep your personal information secure at all times. Provide your personal information only to those who you have initiated contact with and when you fully understand how your information will be used by this contact. Verify that it won’t be shared outside of the agreed upon terms. For instance, when applying for credit or an auto loan, you will be asked to provide personal information like your social security number. This is a normal and necessary practice in order to obtain a credit report. If you are applying online, look for the padlock in the website address bar indicating that the website is secure. You will also see https: in the address line. That little ‘s’ at the end is an important indicator that you are on a secure site. Small but mighty. This is helpful for purchasing items online as well. Your debit/credit card information should remain just as secure and considered your personal information.
- Securing your credit card, ATM, debit card, and deposit account information is just as crucial as your social security number. Keep a record of all your cards and accounts. Photocopy both sides of your cards so that you have the account numbers, expiration dates, and phone numbers in a safe, locked place that only you can access. That way you can access the information if your wallet, or purse are lost or stolen. You will need that information to cancel your cards. Depending if you have multiple checking accounts this will also be helpful in keeping track of which debit card is attached to which checking account avoiding potential overdrafts. Shred all of your paper statements and credit card pre-approval offers. Better yet, signup for electronic statements when you can. By not having paper statements you minimize the chances of your account information being stolen as well as helping the environment. Electronic statements also don’t take up any space in your home and the files are encrypted for your safety. Never give anyone your PIN to access your debit/ATM card and always be mindful when entering your PIN at a store terminal or ATM. You never know who is lurking behind you. Disputing fraudulent charges on your account that have been transacted with a PIN can become complicated. If you gave your PIN to someone to use your card and they rack up charges or withdrawals that you did not permit then be prepared to have to press criminal charges in order to get the funds back. This is not a joke. Your PIN is your Personal Identification Number.
- Safeguard your computer. Identity thieves and hackers would love to have access to your computer. That’s where all of your passwords, account access, browser history–everything–is stored. Keep your computer virus protection software updated. Do not ignore update alerts when they pop up. Yes they are annoying but they are important and worth the time. Do not download files or attachments that have been emailed to you unless you are expecting them from the sender. The same goes for hyperlinks in the email itself. These are easy ways for cyber criminals to gain access to your computer. By downloading a corrupt file this leaves you and your information vulnerable. Only enter your personal information on a website that you trust.
Following these protocols can help prevent fraud and identity theft but nothing is 100% secure. The most important tip is to use common sense. If something doesn’t look right then take your time to ensure that it is safe before proceeding with any transactions. Monitor you bank statements and check your balance daily through your mobile app. Always know how much money you have so that you can be on top of any missing funds. Catching identity thieves quickly is the key to fraud detection and minimizing any damage to your finances as well as credit worthiness.
What to Do if You Suspect Fraud/Identity Theft
If you are a victim of identity theft, understand that it does not get resolved immediately. It will take time, patience, and a plan to recover from any damage done. The sooner you deal with the problem the faster you will see results. Here are some basic tips to consider before you get started:
- Take diligent notes and remain organized.
- You will communicate with a lot of people helping you during the process, so be sure to make note of who you spoke to and what they told you (You will have many tasks to complete on your own and your notes and contacts will be able to assist).
- Keep copies of all letters and communications.
- File paperwork promptly.
- Store everything in a safe and accessible place.
Being proactive in preventing identity theft, will help you avoid these hassles that come along with it.
For unauthorized bank account or credit card use:
- Contact your creditors immediately. Your card will be cancelled immediately upon informing your financial institution or creditor but some damage may already be done.
- Request a new account number and a new card.
- File a police report when filing a dispute against the fraudulent charges. Request a copy of the report and keep the investigators information handy for easy access if there is follow up needed.
Disputes are easier when it comes to credit cards because a credit card is based on a line of credit, not actual funds in your checking account. Though with credit card fraud there may be a large flux in your line of credit balance. This may result in some negative effects on your credit score due to your available balances shifting that you will want to monitor. Keep in mind that all disputes on your credit report must be made by you through the credit bureau. Your financial institution cannot file a dispute on your behalf. When dealing with disputes on a debit card purchase or checking account transaction there can be a provisional credit applied to your account for the missing funds. However, that cannot happen until a dispute has been filed by you with the financial institution so it is imperative that you act quickly and follow the procedures that are given to you. There are no shortcuts.
Keep in mind that all disputes on your credit report must be made by you through the credit bureau. Your financial institution cannot file a dispute on your behalf.
If a collection agency attempts to collect on a fraudulent account, explain in writing that you are a victim of identity theft. Promptly provide copies of all necessary paperwork. This is a red flag and should prompt you to pull and review your credit report to ensure there aren’t any other fraudulent accounts in your name. When finished with the collection agency, ask that they confirm in writing that you do not owe the balance they were attempting to recover and that the account has been closed. You may also have to contact the creditor that they are collecting on behalf of. For example, if it was a fraudulent credit card, then contact that credit card company to inform them that the account was fraud and you are working with the collection agency, credit bureaus, and police to resolve the matter. Follow every step needed to make sure the account does not remain on your credit report. Keep all documentation and communications in a safe place in case it’s needed in the future.
It is important to remember that a crime has been committed. Report the fraudulent activity and file a police report immediately. Even if it was a family member or a close friend, a police report must be filed and you must press charges in order to recoup your losses.
Continue to monitor your credit report from all three bureaus; Equifax, Experian, and Transunion. You are able to apply a fraud alert to your credit report that can last for up to 7 years. You can also place a freeze on your credit files. When you do this, you will be given a password needed to access your credit file. That way if someone attempts to apply for credit with your personal information they won’t get very far. A copy of a police report may be needed to show that fraud has happened on your account.
Remember, recovering from identity theft and fraudulent activity is a long process. Staying organized, keeping track of all documentation and contact information, and continuing to diligently monitor your accounts will help you be a little more in control. Here are the phone numbers and websites to the three major credit bureaus:
Identity Theft and Your Children
Don’t discount identity theft happening to your children. According to a survey done by Experian, the average age of a child identity theft victim is 12 years old. There is a lot of value in using a credit report with no history on it. There are many “first time borrower” programs for multiple loan products. An identity thief can exploit this for their own gains. By combining real and falsified information, an identity thief can create a seemingly legit profile to apply for credit. Red flags to watch out for include:
- Receiving credit card offers in the mail for your child.
- Jury duty notifications in your child’s name.
- Receiving calls for your child from debt collectors.
According to a survey done by Experian, the average age of a child identity theft victim is 12 years old.
All these things may seem like a minor error and inconvenience but have way more detrimental consequences. This could mean that your child’s personal information has been compromised.
Resolving identity theft and fraud for a minor can be just as involved as it is for an adult. You will still have to go through the same steps we outlined above with each creditor, but it’s not as simple as just telling the creditor that it is a minor. A majority of offenses are committed by family or friends, someone that is close to the child and has access to their information, as well as verifying information like phone numbers and addresses. This makes it a harder case to prove. If that is the case, it is up to you as the parent or guardian to press charges against the family member or friend. This may be a difficult thing to face, but remember that your child’s future depends on it.
Prevention requires much of the same precautions that you would take as an adult, though you are now doing it for someone else which means you may have to be even more diligent. Educate your children about identity theft and fraud. Experian wrote a great article about how to talk to your children about this. Help them make it a habit to create strong passwords and make sure they understand why they should not share them with anyone. You may find that they already have a strong grasp on technology but not fully comprehend why their password needs 12 alpha numerical characters as well as symbols to create an acceptable “strong password”. Make it known that identity theft and fraud could still happen to them even though they don’t have credit or other financial responsibilities. Keep their personal documentation like social security card and birth certificates, in a safe, locked location with your own personal documentation. Don’t take it lightly when asked for your child’s information, like when signing up for summer camp or sports programs. Though their social security number may be requested it is likely not required for your child to participate. It is your responsibility to make smart choices and make the appropriate inquiries on behalf of your child.
Identity Theft and the Elderly
Sadly, senior citizens have become a major target for identity thieves. Coming from a generation where trust and politeness were encouraged, it is easy to exploit these qualities when you are a criminal. Couple that with inexperience with technology and you have the perfect recipe for disaster.
Most often, identity thieves will target seniors over the phone because they are more trusting, have the time to talk, and are willing to discuss personal information if asked the right questions. Urgency is used to make it seem like it is imperative to give out a social security number or account number. Not fully understanding the consequences could mean ample time for a criminal to make their move and wipe out bank accounts.
The internet is where criminals will use other methods like emails, pop ups, and fraudulent websites to exploit seniors. Emails will ask for personal information to be sent or have a link to a fake website that looks like the one they are used to seeing. When clicked, these links can unknowingly give the thief access to the victim’s whole computer.
Prevention can be as easy as hanging up the phone. It is not normal for a financial institution to call and ask for personal information. If you feel uncomfortable, ask for the person’s name and say that you will call back. DO NOT use the phone number that the caller provides. Find a phone number for the institution from a reputable source (such as the back of your debit card or on your statement) and call back to verify that it was a legitimate call. Do not feel obligated to give them your information. The same goes for emails. If it’s from someone you don’t know, then don’t trust it.
Important Note to Younger Generations: It’s our responsibility to keep the elderly safe from such attacks.
Important Note to Younger Generations: It’s our responsibility to keep the elderly safe from such attacks. Educate your senior parents, grandparents and family friends about the dangers of identity theft and how to prevent it. You could even consider posting a note by their phone and/or computer to remind them of red flags. Be a resource for them. Let them know that if they are unsure, that they are welcome to call you for help. It’s also important to share with them the possibility that family and friends can also commit these crimes, so it’s imperative that they stay vigilant.
Unfortunately, identity theft and fraud are very real threats that aren’t only seen in the movies. It can affect everyone. It is imperative to stay diligent with prevention. Routinely change your computer and mobile app passwords. Review your bank statements regularly and get your free credit report once a year. Keep your personal documents and financial records in a safe place. If you or a loved one becomes a victim, follow our steps noted above. The most important thing to remember is you must be aware of where and how you share and store your personal identifying information. Take the time to routinely safeguard against identity theft and fraud to avoid the heartache and hassle of recovering from being a victim.