Criminals are taking identity theft to the next level by exploiting the identities of the deceased and leaving their families to deal with the consequences.
The tactic is called “ghosting”. Each year, thieves steal the identities of nearly 2.5 million deceased Americans to fraudulently open credit card accounts, obtain loans and tax refunds, and get cell phone or other services, according to the IRS.
Law enforcement and government units are vigilant in pursuing and punishing this type of fraud. In one recent case, two co-conspirators in Florida were nabbed by the FBI, convicted, sentenced to long prison terms and ordered to pay $1.3 million in restitution.
When a person passes away, it takes time for financial institutions, credit reporting bureaus and government entities to update their records. This lag time gives nimble criminals a relatively wide window of opportunity to cash in. Adding to the thieves’ success, the victims are no longer around to monitor their finances and grieving families are often occupied with other matters.
So, how long is the information at risk? The Identity Theft Resource Center (ITRC), a not-for-profit organization established to support victims of identity theft, reports that it can take up to 60 days for a name to make it onto the Death Master File, maintained by the Social Security Administration (SSA). The file lists the names, date of death and Social Security numbers of people who have passed. It also notes whether the death was verified and a death certificate issued.
That 60-day window gives the ID thieves enough time to do their dirty work. In addition, the deceased person’s credit accounts remain open until the reporting agencies and creditors are notified of the death. The ITRC says an account can stay open for as long as 10 years without showing any activity.
Sunshine State Scammers
In the recent Florida case, two residents were sentenced to 11 and 12 years in prison, respectively, followed by three years of supervised release, for their roles in a ghosting scam. The two criminals were found guilty by a jury of:
- One count of conspiracy to commit wire fraud,
- One count of conspiracy to commit identity fraud,
- 15 counts of wire fraud, and
- Five counts of aggravated identity theft.
In addition to being sentenced to prison, the crooks were ordered to pay joint and several restitution of more than $1.3 million.
The thieves committed their crimes by acquiring and using the names, dates of birth and Social Security numbers of deceased individuals to file false federal tax returns and claim refunds. They were going after refunds that are paid as Refund Anticipation Checks. The checks in this case were printed at a local tax preparation company where a “particular defendant” had access or control, according to the Justice Department. The checks were then deposited into a bank account controlled by the duo.
There are ways you can work toward preventing this happening to your family. Although emotions will be running high after a loved one’s death, try to take these five steps as soon as possible to help prevent the theft of the person’s identity:
- Don’t put too much information in an obituary. Omit items such as birth date, address, mother’s maiden name or other personal identifiers that identity thieves could exploit.
- Obtain at least a dozen copies of the official death certificate. In many states, you can get either informational or “certified” copies of a death certificate. Informational copies are for personal records and usually available to anyone upon request. Certified copies bear an official stamp, and are necessary to carry out many tasks after a death. In an increasing number of states, certified copies are available only to members of the deceased person’s immediate family, the executor of the estate or someone who can prove that he or she has a direct financial interest in the estate.
- Obtain a copy of the deceased person’s credit reports. Each report will indicate whether any credit accounts remain open (and, therefore, need to be closed) and whether any collection notices are pending. Be sure to ask for all contact information indicated on the deceased’s open accounts. If you’re a surviving spouse or own property jointly with the deceased, immediately notify credit card companies, banks and other financial institutions, creditors and mortgage companies of the death.
- Also review each credit report and if evidence of fraud exists, a surviving spouse or executor should add an alert to the report. In addition, a family member should notify the police and contact any creditor associated with an affected account.
- Mail copies of the death certificates by certified mail with return receipt to each credit-reporting bureau — Equifax, Experian and TransUnion. Ask them to place a “deceased alert” on the report. For joint accounts, remove the deceased’s name. Send the IRS a copy of the death certificate as well, so the agency can flag the account to reflect that the person is deceased.
Many Potential Suspects
Ghosting is typically a crime of opportunity perpetrated by strangers. But don’t discount the possibility that a family member might commit this type of fraud. If you suspect that an incident of identity theft is an inside job, seek professional guidance.