In 2021, there were more than 5.8 million incidents of fraud reported to the U.S. Federal Trade Commission over the course of the year. These instances of fraud cost an estimated $6.1 billion.
Unfortunately, our family was the victim of some of this fraud. Specifically, someone opened a bank account in my husband's name, cashed a bad check on the account to get the money, and left my husband with a bank account that had a negative balance.
We were very surprised that this happened because my husband's credit was frozen, so we thought it was impossible for someone to have opened a fraudulent account in his name. But, that wasn't the case. Here's why.
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Someone might be able to open a bank account in your name even if your credit is frozen
The reason that someone was able to open a bank account in my husband's name despite the fact that his credit was frozen is very simple. Many banks do not check your credit score when they open an account because you aren't borrowing money. So, a credit freeze wouldn't stop a scammer from opening an account because the bank would likely never see it at all.
See, credit freezes can protect against certain kinds of fraudulent actions. If someone tries to apply for a new loan such as a credit card or personal loan in your name, the card issuer or lender would try to check your credit. When they saw it was frozen, they wouldn't be able to proceed with opening the account so the thief would be thwarted.
Banks, however, use a different system to look at your checking and savings account history. It's called ChexSystems and it's focused on your past banking relationships rather than your past borrowing relationships.
If you've had a bank account involuntarily closed -- perhaps because you had a long history of overdrafting the account and having a negative balance -- this would show up on your ChexSystems report and could cause banks not to do business with you. But, of course, my husband had no red flags on his ChexSystems report, so the bank opened the account for the scammer and then allowed that person to cash the fraudulent check.
How to prevent this kind of fraud
After my husband realized that he had been the victim of fraud, he contacted the bank and it took care of everything including closing the improperly opened account and ensuring my husband didn't have to pay the outstanding balance needed to bring the account balance back to $0 since it was negative after the bad check was cashed.
Still, this was stressful for us and it took time to resolve. But, during the process, we learned that this could have been avoided if we had placed a security freeze on his ChexSystems report as well. This can be done online at the ChexSystems website and it works very similarly to the security freeze for your credit report, as it prevents financial institutions from accessing your record unless or until you provide special authorization.
We have since frozen my husband's ChexSystems account using this online website so we don't have to worry about this kind of problem happening again. The downside is if we need to open a new account, my husband will have to unfreeze his report. But since we know scammers out there have his info, we're willing to put up with this hassle to avoid fraudulently opened accounts in the future.
If you have been the victim of a data breach and know scammers have access to your info, it may be worth freezing your ChexSystems report as well as freezing your credit. That way, you won't have to deal with the trouble we did in getting a fraudulently opened account closed for good.
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FAQs
File for an identity theft affidavit
Can someone open a bank account in your name if you freeze your credit? ›
Placing a freeze on your credit means that no one can access your information to fraudulently open a new account in your name.
Why would a scammer open a bank account in my name? ›
Scammers open fake bank accounts in other people's names for many reasons, including to write bad checks, launder money and evade taxes. The best way to monitor your bank account history is to review your ChexSystems reports and credit reports.
How do I stop someone from opening a bank account in my name? ›
You should consider placing a Security Freeze on your consumer file at ChexSystems. This is the system most banks use to verify your identity when opening a bank account. They check for derogatory information regarding your banking history to assess their risk of opening a new account with you.
Who to call if someone opens a bank account in your name? ›
To report identity theft, contact: The Federal Trade Commission (FTC) online at IdentityTheft.gov or call 1-877-438-4338. The three major credit reporting agencies. Ask them to place fraud alerts and a credit freeze on your accounts.
What if someone has opened a bank account in my name? ›
Someone has opened an account in my name
If this happens, contact your bank straight away and make sure you keep all correspondence. Also contact credit reference agencies if someone has applied for a loan or credit card in your name.
Can someone use my SSN if my credit is frozen? ›
No. While a security freeze can help keep an identity thief from opening most new accounts in your name, it will not prevent all types of identity theft (such as; criminal, driver's license, government benefit, insurance, medical, and Social Security).
What if someone used my Social Security number to open a bank account? ›
If someone uses your SSN to obtain credit, loans, telephone accounts, or other goods and services, contact the Federal Trade Commission (FTC). The FTC collects complaints about identity theft from those whose identities have been stolen.
What do I do if someone tried to open a bank account in my name Bank of America? ›
Speak with the fraud department and explain that someone has stolen your identity. Request to close or freeze any accounts that may have been tampered with or fraudulently established. Make sure to change your online login credentials, passwords and PINs.
What happens if a scammer has your name? ›
If your identity has been stolen, scammers will likely try to access your credit or steal from your bank accounts. By regularly monitoring your credit reports, credit score, and bank statements, you can spot fraud relatively quickly.
In Most States, Banks Do Not Let You Remove a Spouse Without Their Consent. The vast majority of banks do not allow account holders to remove a spouse from a joint checking account without their consent, though there are some exceptions, depending on your state and the nature of the account.
Does a credit report show bank accounts? ›
Your bank account information doesn't show up on your credit report, nor does it impact your credit score. Yet lenders use information about your checking, savings and assets to determine whether you have the capacity to take on more debt.
How do I report someone opening a bank account? ›
Report the Crime to the Police
Under California law, you can report identity theft to your local police department. Ask the police to issue a police report of identity theft. Give the police as much information on the theft as possible.
What to do if someone steals your identity and opens a bank account? ›
Call or email the fraud department of the companies, banks or credit unions where accounts have been compromised. Explain that someone stole your identity and ask them to close or freeze the compromised account.
How do I check to see if someone is using my Social Security number? ›
Contact the Internal Revenue Service (IRS) at 1-800-908-4490 or visit them online, if you believe someone is using your SSN to work, get your tax refund, or other abuses involving taxes. Order free credit reports annually from the three major credit bureaus (Equifax, Experian, and TransUnion).
Can you open a new bank account if your account is frozen? ›
But in the meantime, if your account is frozen or might be, we recommend that you open a new bank account at a new bank where you don't owe any money. Notify your employer to deposit your paycheck into this new account. Move any money from your old account to your new account.
Can someone open a credit card in my name if my credit is frozen? ›
With a security freeze, your credit reports cannot be accessed (with some exceptions) to open new credit unless you temporarily lift or permanently remove the credit freeze.
How to find out if credit cards are open in your name? ›
Your credit report will display every open account in your name, from bank accounts to credit cards and more. Every year, you can request one free copy of your credit reports from each of the three nationwide credit bureaus. All you have to do is go online and visit www.annualcreditreport.com.
What is the downside of freezing your credit? ›
A freeze can give you a false sense of security — you may still be susceptible to credit fraud or other fraud involving your Social Security number. A credit freeze won't affect your current accounts, but if a thief steals the information on an existing account, your credit may be used without your permission.
