Guard Against Skyrocketing Trend: Cell-Phone Account Fraud

Photo by Geiza Macedo Silva

See these security tips.

There’s a new cyber crime sweeping the nation: Cell-phone account fraud. Cell-phone account fraud includes identity theft, financial takeovers and SMS-based two-factor authentication (2FA) bypass.

The repercussions are ominous.

The trend is not easing. It has the attention of the federal government’s Internet Crime Complaint Center and the Federal Communications Commission, as an estimated 56.1 million Americans annually are impacted or lost money due to phone and mobile scams. That’s $452 per person, totaling roughly $25.4 billion collectively in the U.S. (See Truecaller spam stats.) That’s a huge increase from 680,000 victims in 2018.

Cell-phone account fraud occurs when someone opens a bogus account in your name, and is able to get an entrée to your checking and savings accounts, and then applies for credit cards or sells your phone number on the dark web. This, of course, creates havoc for your reputation and finances. Worse, it’s hard to fix such identity theft.

Precautions to take

Don’t give social media, such as Facebook or X, your phone number. They frequently will ask you for it under the guise of protecting you.

Don’t give social media, such as Facebook or X, your phone number.

Facebook has had privacy and security issues, which means it’s failed miserably in protecting private consumer data.

Your problem will easily start if a criminal spots your phone number on social media or elsewhere, or if the hacker steals your information from Equifax or other companies. You might recall the $425 million Equifax data-breach settlement.

From such companies, a hacker can also easily obtain your Social Security number, driver’s license number and address. Some information is often available on search engines. Don’t believe me? Google your name.

Cell-phone account fraud can go unseen for some time. By the time you find out, your phone service will stop working or your bank accounts will be empty. Plus, credit-card debt collectors will be calling you, and you might find yourself falsely accused of committing crimes (more on that later). 

Precautions to take

The first thing to do is freeze your credit information so you can’t be hurt by agencies inserting black marks on your credit report.

The first thing to do is freeze your credit information so you can’t be hurt by agencies inserting black marks on your credit report.

The agencies include the National Consumer Telecommuncations and Utilities Exchange (NCTUE), a credit reporting agency fed by data from cell-phone companies, pay-TV companies, and utility service providers.

NCTUE manages credit reports supplied to cell-phone, cable, gas, or electric utilities providers. You can freeze your credit with NCTUE online, by telephone (866-349-5355) or by mail (NCTUE Security Freeze, P.O. Box 105561, Atlanta, GA 30348).

2. Secondly, get a PIN for your cell-phone account. This will stymie cybercriminals from being able to move your phone number to another account, which is called porting. Porting is a big danger.

3. Thirdly, carefully monitor your bank accounts, cell-phone bill, and other transactions.

What else can happen

When your bank or credit union texts you a verification code (two-factor identification), the six-digit code is wrongly sent to the criminal, not you.

Criminals who have your number from porting can open a new phone account and have the bill sent to their address. Once they have the account long enough, they then apply for credit cards and loans using your name.

Criminals who have your number from porting can open a new phone account and have the bill sent to their address. Once they have the account long enough, they then apply for credit cards and loans using your name.

They can also sell “your” new phone number to other criminals who might be dealing in human trafficking or drugs. Yes, if this happens, you will be pursued by law enforcement.

Many of the criminals apply for new phone plans in order to acquire a new, expensive device. Then, they will sell the phone and desert the account. This means you’d be stuck for the cost of a new phone worth $1,000 or more.

Unlike personal bank account or credit-card consumer protection, there are no liability limits. This means you don’t have such protection from phony cell-phone bills.

That’s why it’s worth considering taking advantage of a free credit report from each credit bureau under the Fair Credit Reporting Act once each year.

Other precautions

Contact your cell phone company right away if you stop receiving calls or texts.

Never, ever, give your banking or other passwords and personal ID numbers to anyone.

If someone contacts you – either by phone, email or text – and requests any personal information, don’t give it to them and report the number and person to the phone company and authorities.

Keep your personal information off social media – details about your first car, maiden name, date of birth or your phone number.

Tell your bank or credit union to notify you of any financial transactions in two different ways (e.g. text and email).

Compartmentalize your email addresses. Use different email addresses for your financial transactions and social media, etc.

Here’s a list of phone carrier-provided protections (free & paid)