There is officially nowhere left to hide from identity thieves -- not even six feet under.
The identities of nearly 2.5 million dead Americans are used every year by scammers who illegally apply for some type of credit, according to a study by ID Analytics, a fraud prevention firm.
Of those, the identities of 800,000 deceased Americans are intentionally targeted by fraudsters equipped with specific names, Social Security numbers and birthdays they use to apply for various credit products or cell phone services. On the other hand, the identities of about 1.6 million dead Americans are used by mistake by criminals who simply guess and wind up using a Social Security number belonging to someone who’s now dead.
And on top of that, the study found that the identities of several hundred thousand severely ill Americans are potentially also misused every year.
ID Analytics works with credit providers like banks and cell phone carriers to gain insight into the strategies of identity thieves. The study compared the names, dates of birth and Social Security numbers on 100 million applications during the first three months of 2011 to data in the Social Security Administration’s Death Master File, which is a public record of deceased individuals.
"This study brings to light a significant problem as we see fraudsters intentionally using identities of the deceased at the rate of more than 2,000 per day," said Dr. Stephen Coggeshall, chief technology officer at ID Analytics. “We have no sense of where criminals are getting the numbers, but a certain portion of them probably are coming from public sources, like the Death Master File.”
The National Technical Information Service (NTIS) of the U.S. Department of Commerce sells updates of the Death Master File to financial and credit firms in order to cross reference credit applications and prevent identity theft. There are even apps now that provide the entire DMF list of deceased Americans. But with fraud occurring at such a high rate, who is actually accessing this list?
If a company doesn’t check credit applications with the Death Master File, it may be a while before anyone notices when a criminal illegally obtains credit. The average -- and living -- person would most likely report any unauthorized charges or unusual credit activity. But without that first wall of defense, criminals have a much better chance at getting away with what they came for. This is why it’s now so important for people to continue monitoring a deceased loved one’s credit report for at least a year.
This data may make identity theft seem inescapable, but HLN Money Expert Clark Howard says there is one place for consumers to hide, and that’s behind a credit freeze. In order to prevent a deceased family member’s identity from being stolen, the death must be reported to all three credit bureaus in order to freeze the credit file. You can request that a “deceased – do not issue credit” flag be placed on the report, but there are exceptions. Bankrate.com takes you through the steps of how the process works.
Clark says a credit freeze is the safest way for all consumers to protect themselves against identity fraud. It allows you to seal your credit reports and then use a personal identification number (PIN) to temporarily “thaw” credit whenever you need to legitimately apply for credit products and services. The cost ranges from $3 to $10 per person per bureau to freeze a credit report -- a lot smaller price to pay than what identity theft would likely cost you.