Identity thieves may be living large—watching HBO, running the AC nonstop and taking long showers—all on your dime. Learn about utility fraud and how to protect yourself in this Q&A with Brett Montgomery, a fraud operations manager at IDentity Theft 911′s Resolution Center.

What is utility fraud and how does it affect consumers?
Utility fraud comes in several flavors. The most common involves the opening of a fraudulent account—for cable, electricity, water or gas—in a consumer’s name without their knowledge. One reason this type of fraud is so common is that it’s so easy. Very little information is needed to open a utility account—a name, phone number, and service address are usually enough, and in any case, the service address belongs to the criminal.

Another reason utility fraud is so prevalent is that it takes a long time to discover. In most cases, there’s no way for the victim to know that an account has been opened in his or her name. The fraudulent account often is opened with another service provider in another city or state—and even after an account goes to collections for nonpayment, it can be months or years before a collection agency can track down the supposed account holder. By that time, the criminal is long gone.

What can consumers do to protect themselves against utility fraud?
This is a tough question because the crime itself is so easy to commit. In general, we give the same advice for utility fraud as for other forms of account fraud: Don’t expose your personal information, and watch your accounts and credit reports for anything suspicious. Shredding bills and other documents before you dispose of them is especially important. A lot of the information used in utility fraud is simply pulled from the victim’s trash.

But the truth is that while you can take measures to protect yourself, this crime cannot be prevented. We have had cases where consumers who regularly check their credit reports still had no idea that accounts had been opened and services rendered in their name. Why? Because the accounts aren’t reported until they reach collections—and even then, they have to find the consumer before they can report it.

Because so little information is required to open the account in the first place, connecting those dots can take a very long time. To make things worse, the criminals are using their own address as the service address, so collection notices go to the criminal, not the consumer. The result is that the victim remains in the dark.

What are the different types of utility fraud?
Cable accounts are actually the No. 1 type of utility fraud we see, followed by the opening of fraudulent household electricity and gas accounts. We see fraudulent accounts being opened with all the major cable providers—Dish, Comcast, DirecTV—and at this point, they know us well.

These cases can be tricky for consumers to resolve, because you really have to know the process. It can be hard for a consumer even to get to the right department. It can be confusing and time-consuming to deal with the documentation and other requirements for getting the fraudulent account removed.

One fact worth noting is that utility fraud hits about 15 percent of senior citizens.

What is the downside of not discovering and resolving a utility fraud?
If you have a utility account nonpayment on your credit report, it takes seven years for that to drop off your record, and it will affect your credit score. This assumes that the same collection agency is handling the account for the entire seven years. If the account moves to a different collection agency and they file a new report, the seven-year window starts all over again.

How are these cases resolved?
Trying to clear it up is difficult. A consumer basically needs about twice as much information to clear their name as they would need to open an account in the first place. To do that, there are three documents that are essential from the point of view of the utility company:

• A police report to show that the crime has been reported, and

• A sworn affidavit from the victim attesting to the facts in the case.

• Proof of a current utility service with the dates of service.

Beyond that, the more documentation, the better. We also prepare a letter to the utility company on behalf of the consumer. When we initially notify the utility company, we ask them, “What do you need?”

Most utility companies are satisfied to have the consumer complete the standard affidavit provided by the Federal Trade Commission (FTC). But some utilities require that the consumer use their own form for the affidavit. Either way, we verify the requirements and work with the consumer to complete them.

Are there other utility-related scams that people should know about?
The AARP has a solid that’s worth checking out. One common fraud scam uses spoofing software to manipulate the information that appears via Caller ID to make it look like the call is coming from a utility company. When you answer, the caller tells you that your account is past due, then offers to have you take care of it right then and there—all you have to do is give them your credit or debit card information. Needless to say, if your bill really was unpaid, it will stay that way.

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