Account opening fraud

Fraud at signup, before any legitimate use.

The account is new, and the identity behind it is stolen, invented, or fabricated, so the fraud starts on day one.

Creation of a new account using stolen, synthetic, or fabricated identity data.

Fraudsters open accounts for several reasons:

• To borrow money, by opening credit or loan accounts they never plan to repay.
• To move money, by opening accounts that act as mule accounts in a laundering chain.
• To abuse offers, by opening many accounts to collect sign-up bonuses or promotions.

The identity data behind the account can take three forms:

• Stolen identities, which belong to real people.
• Synthetic identities, which blend real and invented details.
• Fabricated identities, which are invented entirely.

The point of defense is onboarding:

1. The service verifies the identity document.
2. It confirms a live person matches it.
3. It checks the details against records and for duplicates.
4. It decides to approve, decline, or review.

Account opening fraud sits next to terms that are easy to mix up:

• Account takeover attacks an existing account, while account opening fraud creates a new one.
• Application fraud is the broader term for false information on any application, and account opening fraud is the version at account creation. The industry also uses the term new account fraud for the same thing.
• Onboarding is the process where the fraud has to be caught.

For more, see 1 in 3 College Applications Are Fake: How Identity Verification Stops FAFSA Fraud.