Insights

Compromised Credential Fraud Causing Spike in Counterfeit HELOC Checks

We have seen a spike in counterfeit HELOC check loss arising out of compromised credential fraud, where criminals enroll a current customer in online banking using stolen credentials without their authorization or knowledge. This type of fraud is a sister to "new account fraud," where a fraudster opens a brand-new account based on a fraudulent identity.

 

How it works:

Fraudsters obtain personal information such as names, birth dates, Social Security numbers, addresses, and phone numbers, through various means like data breaches, phishing scams, or the dark web.
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This information is often combined with counterfeit identification documents and used to enroll in online banking using the victim's name without their knowledge or consent
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Once the imposter has full access to the victim’s account, fraudulent HELOC checks are requested and issued.

This method circumvents the many controls banks have put in place surrounding wire transfers.

 

How can a bank reduce the risk of falling victim to this scam?

Consider adopting the following strategies:
  • Implement a customer call back using core system contact information for each newly established online banking enrollment.
  • Add a system authentication procedure for each new online banking enrollment.
  • Implement a customer callback for checking verification on large HELOC checks (signature comparisons are inadequate because signatures are electronically lifted so they look almost identical).
  • Utilize fraud detection software and flag for unusual customer behavior as well as increase in online banking registrations.
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