Ghost Fraud — Identity Theft of a Deceased Person

The passing of a beloved family member is difficult enough as it is. Whether it’s making arrangements for their last wishes or figuring out various personal affairs, it’s a difficult time for family and friends. Unfortunately, criminals are now using the identities of deceased people to perpetrate fraudulent activities. This form of identity theft — referred to as ghosting — is when a thief uses fake identity credentials to take advantage of the deceased person’s credit rating. The thief can then apply for credit cards and loans with the fake ID and rack up the charges with the goal of taking off with the proceeds.

Millions of identities

A report (dating from 2012) stated that 2.5 million deceased American identities are stolen each year. Of those 2.5 million stolen identities, 800,000 were used to open lines of credit or get a mobile phone plan. This type of identity theft is oftentimes committed by people who actually know the deceased person because they have easier access to the documentation and information necessary to pull off this fraud.

That’s not to say fraudsters don’t use this technique on people they don’t know. With all the data breaches that occur and confidential information available on the dark web, fraudsters with no connection to the deceased can gather enough information to pull off this particular type of scam.

Obituaries and other sources of information

Sometimes, the information unknowingly comes from the family or friends themselves. If an obituary contains personal information about the deceased, the fraudster can use it or discover other details using the collected information as their search criteria. With social media and other fountains of personal information online, finding enough information to create an accurate profile is not especially onerous.

For financial institutions, if the identity information is accurate and the person’s account is not halted and in good standing, they appear like a good customer. It can take months before they discover that the account has been compromised.

Bust-out fraud

The fraud might even extend over a much longer period of time, if the fraudster continues to pay the bills on time. They might be working a longer-term scheme, building up the credit lines for one big pay out, or perhaps they just want to use the new identity as their own was tainted somehow from previous activities.

The thief can also use deceased identities in various other schemes including:

• Collecting tax refunds or other government benefits
• Hijacking bank or other financial accounts before the executor gains control of the assets
• Using a fraudulent driver’s license to get insurance under cheaper coverage rules
• Saving on medical costs by getting a drug payment card
• Taking over social media accounts to ask for funds, or promote questionable items

Protect against fraudsters

Considering the schemes and how they come about provides insight on how to prevent these frauds. Taking action and informing relevant government agencies, credit bureaus and financial institution as soon as possible, will flag the account and make new activity difficult. Keeping a tight lid on information will make it harder for potential fraudsters to glean data that is useful for indicating targets or creating fake IDs. This includes avoiding giving out too much information at funerals, closing social media accounts and not talking about financial information unnecessarily.

While quite unseemly, the sad fact of the matter is that identities of deceased people are used fraudulently. It’s probably the last thing on a loved one’s mind, but taking swift action can help ensure that the memory of a loved one — and their assets — aren’t taken advantage of after their passing.