Think back on a moment when you were falsely accused of something. Whether the accusation was large or small, the experience was probably unpleasant at best and soul-shattering at worst. Let’s face it, having your integrity questioned is painful, and not being believed can destroy you.
Now imagine getting a letter from the IRS accusing you of tax fraud. Or, worse, imagine getting a letter from the FBI informing you that a bank account under your name has been used to launder money tied to human trafficking. For many victims of fraud, these terrifying accusations aren’t just hypotheticals; It’s their real life. They are part of the growing number of victims who are experiencing Framing Fraud and you could be next. Here’s what you need to know.
What’s Framing Fraud?
Every month or so, there is a flurry of headlines announcing that another major company has fallen victim to a widespread data breach. What’s stolen from the breach? Often, it’s the PII (personally identifiable information) of consumers. Fraudsters use the personal information (names, SSNs, dates of birth) obtained through data breaches to open accounts at banks, government institutions, investment platforms, etc. The fraudsters use these accounts to commit a handful of crimes like depositing worthless checks, laundering money, using the account as part of a social engineering scam or mule account - and the list goes on.
Long story, short: If your data has been stolen during a breach, there’s a strong chance there’s an account created under your name that you don’t even know about.
What happens to individuals who fall victim to Framing Fraud?
A victim might receive a message from the IRS or a collection agency may call to collect on a negative balance on an account they never opened. After the shock and confusion wear off, it’s up to the victim to clear their name of a crime they didn’t commit or a debt they didn’t authorize. This can often require hiring a lawyer and paying significant legal fees that won’t be reimbursed.
What can individuals do to protect themselves from Framing Fraud?
Right now, your options are really limited when it comes to protecting yourself from Framing Fraud. If a fraudster opens a bank account under your name or files for unemployment using your SSN, nobody is going to send you a letter in the mail and there’s no website to track this. However, you can find out if someone opened a credit card under your name by reviewing your credit report regularly.
What can companies do to systemically curb Framing Fraud?
The root issue behind Framing Fraud is that digital identity today is broken. Nearly anyone with personal information such as name, social, and DOB, can easily open accounts in another person's name. This is because many institutions - even large banks and government institutions - do not have proper identity-proofing in place. Although some institutions require KYC (know your customer) processes, they are not strong enough. To stop these types of scams, robust digital identity-proofing must be widely adopted.
With digital identity-proofing, a consumer must verify their identity through a mobile device, document scan, or other strong proof to establish their identity before being allowed to open an account. Seems like a no-brainer but it's surprising how many institutions do not have this in place. Most importantly, fraudsters are actively searching for institutions that don't have proper digital identity-proofing in place and they even compare notes on Telegram and Reddit to let other criminals know where they've seen success or failure.
In today’s digital environment, protecting your reputation is no easy task. Because fraudsters have access to the PII data of so many victims, it’s easy for them to create fake accounts that help them commit crimes without getting caught. To protect customers from Framing Fraud, companies must take advantage of the latest digital identity technology that can verify identity without relying on easily stolen PII data.
Speak with a fraud expert today to learn how you can prevent Framing Fraud.
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