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A while back I was surprised to see a collections account go onto my credit report for an unpaid amount of a few hundred dollars. I immediately believed it to be a mistake since I had never heard of the company and had not received anything in the mail. Regardless, I immediately disputed it through the credit bureau which came back to say that it indeed WAS my account.

Many calls later to the company (let's call them a less-popular cell phone company), I established that someone had opened an account using my social security number. Here is where I start to get lost. I also established that they were able to do so with the following:

  • An address that did not, nor ever, belong to me
  • My last name spelled very incorrectly
  • A birthdate that was not my own

Because the address was not my own, I never received any sort of notification or bill, therefore I did not know about it until it hit my credit.

I always believed that when an account is opened, this information is sent to one of the three main credit bureau which check the information against what they have on file, but this did not seem to be the case.

How could this possibly have happened and was there anything special this individual did to bypass the identity verification?

I have since added a significant amount of security to my accounts, but I feel like I need closure on this so the same thing doesn't happen to my family, friends, etc...

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    I don't really have anything to back this up (hence a comment not an answer), but they didn't really bypass anything. Whoever ran the credit check at the phone company didn't fully vet the inquiry. Address is really just used as a cross check, and people misspell things on applications all the time. They likely ran the social, saw a name close enough to what was being used, and approved it. – BobbyScon Apr 18 '17 at 22:41
  • @BobbyScon doesn't that mean that anyone that simply has a social security number can open any account anywhere? That's rather concerning since a SS number really isn't that secret anymore. Doctor's offices, insurance offices, and employers all take your SS number written on a piece of paper. Heck, even our children's soccer team applications required a social security number. – T James Apr 18 '17 at 23:07
  • I think the name matching is automatic--and at least in the past, pretty retarded. My wife showed up on my credit report as an alternate spelling of my name. This was apparently from some car shopping, as she is a non-driver she gave the name she goes by socially and they must have run a credit check (this was before they needed permission.) Of course it no-hit--but 3 of 5 letters matched, address matched, I end up with her as an alias. While my name confuses people hers is clearly female--no human called those a match. – Loren Pechtel Apr 18 '17 at 23:27
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    They didn't have to run a credit check to get a phone plan, the phone company sent it to collections which then reported it on your credit. Devil in the details. – CQM Apr 19 '17 at 4:38
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How could this possibly have happened?

Depending on the phone company/plan, a credit check may not have even been run. You can verify this by examining your credit report (which is free and should be run by you at least once per year to look for this stuff). If they ran a check, it would show up under the inquiries. Hard inquiries remain on your report for up to 2 years. If there's no inquiry for it on your report (and you're within that 2 year window), then no credit check was actually performed. If they did perform a credit check, it's very likely that the employee running the check was just lazy. People misspell things on applications all the time. Wrong address? "Oh, I just moved and can't remember my last address." Utility companies, such as cellular providers, don't have anywhere near the same threshold for accurate data collection as financial institutions have. All they really want to know is: Will the bill get paid?

Was there anything special this individual did to bypass the identity verification?

Likely not. It's possible they're friends with the employee that sold them the plan, but it's more likely they just knew that they had just enough info to get what they needed.

How do I stop this from happening again (to myself, family, or friends)?

There really isn't much you can do. Safeguard your personal information and don't provide info like SSNs to entities you don't trust. Run your credit report regularly and keep an eye out for oddities. You are entitled to 3 free credit reports per year; one from each of the bureaus. You can either run all 3 at once, or space them out evenly so you're monitoring throughout the year. You could use a credit monitoring service as well. They will call you any time a credit check is run against your SSN to verify it's legit. There's differing opinions on if those services are worth the money, so I'll let you come to your own conclusion.

It's important to note that financial institutions must go through a much more stringent process to open new accounts and are held to a higher liability standard when fraud occurs. Opening financial accounts goes through Federal regulations, and discrepancies like wrong address, name spelling, etc. are much harder to get away with. Not to say it doesn't happen, but it's far less likely than opening a new phone account. So while you're concerned that anyone can just open an account with an SSN, it's far less of a threat with regards to financial accounts.

  • Identity verification, or "credit check" as you put it, does not necessarily leave a hard inquiries on the credit report. In fact I'm not sure if they do at all. I have recently opened a checking account and answered those security questions (which street have you lived on, etc.) without getting any hard pull. – xiaomy Apr 19 '17 at 19:19
  • Great answer! Unfortunately the take away from all this is that sometimes you don't even know about these types of things until it DOES hit your credit as collections, primarily when a credit check is never even run. I suppose we can only hope for Karma... – T James Apr 19 '17 at 19:29
  • Its very possible, the scheme goes deeper with an accomplice who works at the phone company. – NuWin Apr 20 '17 at 5:25

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