Guest Post: Credit Bureau fraud surged to 500,000 cases in H1 2023, FTC reports

Data analyzed by Atlas VPN reveals the threat of credit bureau scams has escalated, leading to an alarming rise in cases of identity theft and financial fraud.  

This article delves into the evolving landscape of credit bureau scams, integrating data provided by the Federal Trade Commission (FTC) spanning from the first quarter of 2019 to the second quarter of 2023.  

During the first half of this year, the FTC has already received 517,128 credit bureau fraud reports, a record amount since the start of the reporting period in 2019. 

 The data for 2019 shows a relatively modest start with 35,853 credit bureau fraud reports in the first quarter. However, by the end of the year, the numbers had risen to 42,285—an increase of nearly 18% in four quarters. This precursor hinted at the looming escalation of credit bureau scams that would follow in the subsequent years. 

The year 2020 witnessed an abrupt surge in credit bureau fraud reports, reflecting a global shift towards remote operations and heightened digital interactions due to the COVID-19 pandemic.

Starting at 53,945 reports in Q1, the numbers swelled to 101,850 by Q4—a staggering 89% increase. This surge can be attributed to the heightened vulnerability of individuals to phishing attacks and data breaches as scammers capitalized on the pandemic-induced confusion. 

As the pandemic persisted into 2021, the number of credit bureau fraud reports remained consistently high. Q1 of 2021 saw a substantial increase to 141,613 reports, marking a 39% rise from the previous quarter. While the numbers remained elevated, the increase was not as pronounced as the previous year. This trend suggested that individuals and institutions were adapting to the new digital landscape and implementing more stringent security measures. 

The year 2022 displayed a pattern of gradual escalation and refinement in scam techniques. With 192,547 reports in Q4, an increase of nearly 49% from the beginning of the year, scammers were evidently honing their strategies to exploit the evolving digital landscape. This might indicate a shift towards more sophisticated approaches, targeting unsuspecting victims using innovative tactics like spear phishing and AI-generated scam messages. 

The first half of 2023 exhibited an alarming growth in credit bureau fraud, with 243,293 reports in the first quarter and 273,835 in the second. This surge likely reflects fraudsters capitalizing on an increased reliance on digital transactions, remote work arrangements, and a growing pool of leaked data.

The Anatomy of credit bureau scams 

Fraudsters gather personal data from various sources, including data breaches, social media profiles, phishing emails, or even dumpster diving for discarded documents. This information may include full names, addresses, Social Security numbers, and financial details. 

Armed with stolen information, scammers proceed to create false identities or fictitious accounts with the credit bureaus. They pose as legitimate individuals and submit fraudulent applications for credit cards, loans, or other financial services. 

Once the fake accounts are established, the fraudsters regularly monitor the credit reports of their victims. They keep track of credit scores and activities, ensuring that the deception remains undetected. 

With access to the victim’s credit lines, the scammers go on a spending spree, amassing debts on the fraudulent accounts. These expenses may include lavish purchases, cash advances, or transferring funds to offshore accounts. 

To avoid arousing suspicion, fraudsters often make minimum payments on fraudulent accounts, disguising the true nature of their activities. They may also use techniques like ‘bust-out fraud,’ where they max out credit limits and abandon the accounts before moving on to new ones. 

As the debts accumulate, the victim’s credit score plummets, causing significant damage to their financial standing and reputation. The burden of repaying debts they never incurred can take years to resolve, causing emotional distress and financial hardship. 

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