The latest form of identity theft doesn't depend on stealing your Social Security number. Now thieves are targeting your kid's number long before the little one even has a bank account.
Hundreds of online businesses are using computers to find dormant Social Security numbers - usually those assigned to children who don't use them - then selling those numbers under another name to help people establish phony credit and run up huge debts they will never pay off.
Authorities say the scheme could pose a new threat to the nation's credit system. Because the numbers exist in a legal gray area, federal investigators have not figured out a way to prosecute the people involved.
"If people are obtaining enough credit by fraud, we're back to another financial collapse," said Linda Marshall, an assistant U.S. attorney in Kansas City. "We tend to talk about it as the next wave."
The sellers get around the law by not referring to Social Security numbers. Instead, just as someone might pay for an escort service instead of a prostitute, they refer to CPNs - for credit profile, credit protection or credit privacy numbers.
Julia Jensen, an FBI agent in Kansas City, discovered the scheme while investigating a mortgage-fraud case. She has given presentations to lenders across the Kansas City area to show them how easy it is to create a false credit score using these numbers.
"The back door is wide open," she said. "We're trying to get lenders to understand the risks."
It's not clear how widespread the fraud is, mostly because the scheme is difficult to detect and practiced by fly-by-night businesses.
But the deception is emerging as millions of Americans watch their credit scores sink to new lows. Figures from April show that 25.5 percent of consumers - nearly 43.4 million people - now have a credit score of 599 or below, marking them as poor risks for lenders. They will have trouble getting credit cards, auto loans or mortgages under the tighter lending standards banks now use.
The scheme works like this:
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2 comments:
how is this possible...businesses know better then to run credit reports with out signature...i know there are cases where its done over the phone, but working with having to run credit reports all day long, every social security number is associated with a birthday and that birthday will determine the age and if under 18 they are not allowed to have any credit anyway....how is that some may bypass all the legal things and let these people obtain credit?
It's called synthetic id theft. and It's carry how easy it is to get away with. I read about it on pplnational.com, that might help.
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