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Identity theft now hits people in sneaky ways. Criminals no longer stop at credit cards or loans. They test stolen personal data by applying for deposit accounts under your name, which confuses many victims and leaves them unsure how to respond. Brian in Clinton, Pennsylvania recently experienced this twice in the same week. Here is the email he sent us:
“I was recently notified by two different banking institutions that someone completed an online application to open a deposit account in my name. Both banks denied the applications and sent me notifications. One bank sent an email and the other sent a letter. Neither bank will share any information with me about what information was submitted or why the applications were denied. I understand why fraudsters try to open credit accounts, but why would they try to open deposit accounts? One bank told me they could not share any information with me about the failed application due to privacy policy and the other bank said they do not save any information from declined applications from non-customers.
Why would banking institutions not capture or share information about declined online applications? As far as I know, the credit bureaus do not collect information about deposit accounts and Early Warning Services only has information from banks that voluntarily report to them. So, how do I respond or react to someone trying to open deposit accounts in my name? I have put a one year fraud alert on with the credit bureaus but I don’t believe that will help me if someone tries to open a deposit account. Any help or advice would be greatly appreciated. Thanks.” Brian, Clinton, PA
You are right to take this seriously. Deposit account fraud is rising fast as criminals build synthetic identities and test stolen data. When thieves apply for a checking or savings account in your name, they are gathering information about which stolen identities work and which fail. That gives them room to launch more damaging attacks later.
LANDLINE IDENTITY THEFT LEADS TO MAJOR BANK FRAUD
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Why criminals open deposit accounts
Criminals use deposit accounts for several strategic reasons that help them test stolen data and prepare bigger attacks.
Testing stolen data
Fraudsters often begin with deposit accounts because the approval process can be less tied to credit checks. They want to see if your data passes early verification steps.
Moving stolen money
A new deposit account helps criminals launder funds or receive payments linked to scams, unemployment fraud or tax refund theft.
Setting up future attacks
Once they confirm your identity can be used, they may open credit lines or build a synthetic profile that blends your real data with fake details.
Why banks won’t share details
Banks follow strict privacy rules under federal law. Those rules limit the information they can share about any application, even when it misuses your identity. Many banks:
- Purge declined applications fast to reduce their exposure to unnecessary data
- Use external verification services that store the data outside the bank
- Require subpoenas before releasing IP addresses to law enforcement
Even though an IP address can help identify a fraudster, banks will not share it without a legal request tied to an active investigation.
How to protect yourself from deposit account fraud
Take these actions now to lock down your identity and reduce the chances that a criminal can misuse your information again.
1) Consider identity monitoring
Deposit account fraud often falls outside normal credit monitoring. A service that looks at bank accounts and dark web activity adds extra protection. Identity Theft companies can monitor personal information like your Social Security Number (SSN), phone number, and email address, and alert you if it is being sold on the dark web or being used to open an account. They can also assist you in freezing your bank and credit card accounts to prevent further unauthorized use by criminals.
See my tips and best picks on how to protect yourself from identity theft at Cyberguy.com.
2) File an FTC Identity Theft Report
Go to IdentityTheft.gov and complete the report. It creates a formal record you can use if you need to file a local police report later.
3) Add stronger alerts or freezes
Brian, you already placed a one-year fraud alert, but you can upgrade to a seven-year alert. You can also freeze your credit at Equifax, Experian and TransUnion to stop new credit lines from opening.
4) Use a data removal service
A data removal service scrubs your personal details from people search sites that criminals often use to build synthetic identities. This reduces how much of your information can be exploited in future attacks.
While no service can guarantee the complete removal of your data from the internet, a data removal service is really a smart choice. They aren’t cheap, and neither is your privacy. These services do all the work for you by actively monitoring and systematically erasing your personal information from hundreds of websites. It’s what gives me peace of mind and has proven to be the most effective way to erase your personal data from the internet. By limiting the information available, you reduce the risk of scammers cross-referencing data from breaches with information they might find on the dark web, making it harder for them to target you.
Check out my top picks for data removal services and get a free scan to find out if your personal information is already out on the web by visiting Cyberguy.com.
Get a free scan to find out if your personal information is already out on the web: Cyberguy.com.
5) Check ChexSystems and Early Warning Services
These companies track deposit account activity. Request your reports at chexsystems.com and earlywarning.com. Look for unauthorized entries and add a security alert or freeze to both.
6) Notify the banks
Even if they cannot share details, ask them to document the attempt on your record. This helps flag future fraud attempts.
7) Watch your mail
Look for debit cards, 1099 forms or bank statements you did not request. Those often reveal when criminals succeed somewhere else.
Next steps
Print every letter or email from the banks. Complete the FTC report and use it if you need to file a police report. Review your ChexSystems and Early Warning reports and add freezes where possible so your identity becomes less useful to criminals.
Kurt’s key takeaways
Deposit account fraud feels confusing because it works outside traditional credit systems. Yet the goal is simple. Criminals want to see which stolen identities pass early checks so they can launch larger attacks later. A few fast steps can shut that door and give you control again.
What other questions do you want us to tackle about identity theft and online banking safety? Let us know by writing to us at Cyberguy.com.
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