Called “ghosting,” this type of identity theft involves about 2.5 million deceased individuals each year, according to the IRS. Criminals use information like Social Security number, previous addresses, birthdate and employment history to apply for loans, obtain medical services and open credit card accounts.
During the early part of every year, there’s a sharp uptick in fraudulent tax returns that are filed with the identities of deceased persons. The IRS estimates that annual refunds related to ghosting identity theft total about $5 billion.
Ghosting is Difficult to Detect
Relatives of deceased people don’t tend to check credit reports after an estate has been settled. Furthermore, it can take up to six months for financial institutions, the Social Security Administration and credit reporting bureaus to share death records. The combination of those factors gives criminals plenty of time to commit ghosting identity theft.
The AARP notes that criminals often glean personal information from hospitals, funeral homes and published obituaries. As long as they have a name, address and birthdate, scammers can purchase someone’s Social Security number online — sometimes for as little as $10.
Ghostbusting in Action
Fortunately, surviving family members usually aren’t responsible for fraudulent charges with this type of identity theft. In many cases, though, it can still have a negative effect.
For example, survivors may be harassed by collection agencies or become targets themselves. Criminals might drain bank accounts or create tax and credit headaches, particularly for surviving spouses. Those who had joint accounts with the deceased could be on the hook for some of the damage.
When someone dies, taking these steps can be useful:
- In obituaries, listing an age is acceptable. But avoid including a specific birthdate, address, mother’s maiden name or other information that could be used for ghosting identity theft.
- Send copies of death certificates to the three credit reporting bureaus — Experian, Equifax and TransUnion — and request a “deceased alert” on those records. Also mail certificates to financial institutions, credit card companies, insurance firms and banks. In addition, it’s a good idea to use certified mail and to keep a record of where certificates have been mailed.
- Cancel the driver’s license of the deceased in order to prevent fraudulent duplicates from being issued. Ghosting identity thieves can use licenses for a wide variety of criminal activity, including medical identity theft.
- About six months after a death, consider checking the person’s credit report to spot any suspicious activity.
Because it is so unexpected, ghosting identity theft can take a long time to detect. By then, a considerable amount of damage might be done that can affect a deceased person’s estate. Keeping this type of identity theft in mind when a loved one dies can be helpful in shutting down any lingering ghosts.
Image courtesy of Flickr user Matthew Piatt.