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Identity theft is now hitting people in sneaky ways. Criminals no longer stop at credit cards or loans.
They test stolen personal data by asking for deposit accounts in your name, which confuses many victims and don’t know how to react. Brian from Clinton, Pennsylvania, recently experienced this situation twice in the same week. Here is the email he sent us:
“I was recently notified by two different banking institutions that someone had completed an online application to open a deposit account in my name. Both banks declined the applications and sent me notifications. One bank sent an email and the other a letter. Neither bank will provide me with any information about the information submitted or why the applications were declined. I understand why fraudsters attempt to open credit accounts, but why would they attempt to open accounts deposit? One bank told me they couldn’t share information about the failed application with me due to their privacy policy and the other bank said they don’t record all information from applications declined by non-customers.
Why wouldn’t banking institutions capture or share information about rejected online applications? As far as I know, credit reporting agencies do not collect information on deposit accounts and early warning services only have information from banks that voluntarily report to them. So how do I respond or react to someone trying to open deposit accounts in my name? I have issued a one year fraud alert with the credit bureaus, but I don’t think it will help me if someone tries to open a deposit account. Any help or advice would be greatly appreciated. THANKS.” Brian, Clinton, Pennsylvania
You are right to take this seriously. Deposit account fraud is rapidly increasing as criminals create synthetic identities and test the stolen data. When thieves apply for a checking or savings account in your name, they collect information about which stolen identities work and which ones fail. This gives them the opportunity to launch more damaging attacks later.
LANDLINE IDENTITY THEFT LEADS TO MAJOR BANK FRAUD
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Why Criminals Open Deposit Accounts
Criminals use escrow accounts for several strategic reasons that help them test stolen data and prepare for larger attacks.
Test stolen data
Fraudsters often start with deposit accounts because the approval process may be less tied to credit checks. They want to see if your data passes the first stages of verification.
Move stolen money
A new custodial account helps criminals launder funds or receive payments linked to scams, unemployment fraud or tax refund theft.
Configure future attacks
Once they confirm that your identity can be used, they can open credit lines or create a synthetic profile that mixes your real data with fake details.
Why banks don’t share details
Banks follow strict privacy rules under federal law. These rules limit the information they can share on any app, even when it misuses your identity. Many banks:
- Quickly purge rejected apps to reduce their exposure to unnecessary data
- Use external verification services that store data outside the bank
- Require subpoenas before disclosing IP addresses to law enforcement
Although an IP address can help identify a fraudster, banks will not share it without a legal request linked to an active investigation.
How to protect yourself against deposit account fraud
Take these steps now to lock down your identity and reduce the chances that a criminal can misuse your information again.
1) Consider identity monitoring
Deposit account fraud often escapes normal credit monitoring. A service that examines bank accounts and dark web activity adds additional protection. Identity theft companies can monitor personal information such as your Social Security number (SSN), phone number, and email address, and alert you if it is sold on the dark web or used to open an account. They can also help you freeze your bank and credit card accounts to prevent unauthorized use by criminals.
Check out my tips and top picks for protecting yourself against identity theft at Cyberguy.com.
2) File an FTC Identity Theft Report
Go to IdentityTheft.gov and complete the report. It creates a formal record that you can use if you need to file a local police report later.
3) Add stronger alerts or blocks
Brian, you have already issued a one year fraud alert, but you can upgrade to a seven year alert. You can also freeze your credit at Equifax, Experian, and TransUnion to prevent new lines of credit from opening.
4) Use a data deletion service
A data removal service removes your personal information from people search sites that criminals often use to create synthetic identities. This reduces the amount of your information that can be exploited in future attacks.
Although no service can guarantee the complete removal of your data from the Internet, a data deletion service is definitely a wise choice. They’re not cheap, and neither is your privacy. These services do all the work for you by actively monitoring and systematically deleting your personal information across hundreds of websites. This is what gives me peace of mind and has proven to be the most effective way to erase your personal data from the Internet. By limiting the information available, you reduce the risk of fraudsters cross-referencing data from breaches with information they might find on the dark web, making it harder for them to target you.
Check out my top picks for data deletion services and get a free scan to find out if your personal information is already available on the web by visiting Cyberguy.com.
Get a free analysis to find out if your personal information is already available on the web: Cyberguy.com.
5) Check ChexSystems and Early Warning Services
These companies track deposit account activity. Request your reports at chexsystems.com and earlywarning.com. Check for unauthorized entries and add a security alert or freeze both.
6) Notify the banks
Even if they can’t share details, ask them to document the attempt in your file. This helps flag future fraud attempts.
7) Monitor your mail
Look for debit cards, 1099 forms, or bank statements that you didn’t request. These often reveal when criminals succeed elsewhere.
Next steps
Print every letter or email from the banks. Complete the FTC report and use it if you need to file a police report. Review your ChexSystems and Early Warning reports and add freezes where possible so that your identity becomes less useful to criminals.
Kurt’s Key Takeaways
Deposit account fraud seems confusing because it operates outside of traditional credit systems. Yet the goal is simple. Criminals want to know which stolen identities pass early checks so they can launch larger attacks later. A few quick steps can close that door and put you back in control.
What other questions do you want us to address about identity theft and online banking security? Let us know by writing to us at Cyberguy.com.
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