Article by: Kathryn Brown
What You Need to Know About Credit Profile Number and Synthetic ID Fraud
There are numerous fraud schemes out there – if there is money to made, there is going to be fraud of one kind or another. One type of fraud that is becoming more prevalent is Credit Profile Number (CPN) fraud.
A Credit Profile Number is essentially a synthetic social security number. The purpose is to have a number that passes as a social security number for a credit profile associated with a person’s name, address and credit history. A CPN and credit profile can be established for the sole purpose of defrauding creditors.
Within this type of fraud there are many different schemes, some even taking advantage of individuals who have limited to no credit awareness. Some credit repair consultants sell CPN’s as a way to overcome a bad credit history. There have been situations where car dealership finance department employees partnered with such credit repair folks and were providing customers with CPN’s so more cars could be sold to people who otherwise would not qualify for credit. Again, where there’s money to be made…
Why You Need to Know About CPN Fraud
Identity theft is one of the most common fraud schemes. According to Daily Finance.com, “Identity theft victims suffered more than $24.7 billion in direct and indirect losses in 2012 — that’s more than the combined $14 billion in losses consumers experienced from other types of theft (burglary, motor vehicle theft and other property theft) in the same period.” Further, industry experts contend that “synthetic identity theft,” (or CPN) accounts for nearly 85 percent of the more than 16 million ID thefts in the United States each year.
These schemes are not just impacting individual consumers. The 2013 Kroll Global Fraud Report states that “The number of companies falling victim to fraud has increased in the past year,. Overall, 70 per cent of companies were affected by fraud in the past 12 months, up from 61 per cent the previous year, and there was an increase in every category of fraud covered by the study.”
Indicators of Potential CPN Fraud
The people setting up CPNs to commit fraud or mislead creditors go to great lengths to make it difficult to detect. As a result, the Big Data credit reporting services do not flag some fraudulent profiles and creditors get lulled into believing they have a creditworthy customer. That is why it is important to have someone quickly review profiles to look for red flags.
In most cases, a fraudulent CPN will show one or more of the following on the associated credit report:
– Limited Credit History
– Only “established” credit history are from authorized user tradelines
- May have some newer individual trades opened
- Often newer trades are lower credit lines
If someone is in their early 20s, it makes sense that they may have a limited credit history. But the majority of people have an extensive credit history by their 30s. If the credit report does not indicate this then it is probably worth investigating further.
Investigating Potential CPN Fraud
Educating your staff to ensure appropriate handling and investigation is very important to make sure they aren’t scaring away valid customers. From reviewing the credit bureau in detail to performing skip tracing tasks on the information found, developing policies and procedures within your organization to ensure appropriate identification and handling of CPN fraud is important to help fight fraud. The more businesses take action to deter fraud, the more of an impact can be had on the overall fraud losses.
About the Author:
Kathryn Brown is a member of the Association of Certified Fraud Examiners (ACFE). She has been a board member for the International Association of Financial Crimes Investigators (IAFCI), International Association of Auto Theft investigators (IAATI), and the Auto Finance Industry Group. She has a long career in fraud mitigation and collections and is the owner of the consulting firm The Fraud Experts.