My Husband Froze His Credit but Scammers Still Opened a Bank Account in His Name

In 2021, there were more than 5.8 million incidents of fraud reported to the U.S. Federal Trade Commission over the course of the year. These instances of fraud cost an estimated $6.1 billion.

Unfortunately, our family was the victim of some of this fraud. Specifically, someone opened a bank account in my husband's name, cashed a bad check on the account to get the money, and left my husband with a bank account that had a negative balance.

We were very surprised that this happened because my husband's credit was frozen, so we thought it was impossible for someone to have opened a fraudulent account in his name. But, that wasn't the case. Here's why.

Someone might be able to open a bank account in your name even if your credit is frozen

The reason that someone was able to open a bank account in my husband's name despite the fact that his credit was frozen is very simple. Many banks do not check your credit score when they open an account because you aren't borrowing money. So, a credit freeze wouldn't stop a scammer from opening an account because the bank would likely never see it at all.

See, credit freezes can protect against certain kinds of fraudulent actions. If someone tries to apply for a new loan such as a credit card or personal loan in your name, the card issuer or lender would try to check your credit. When they saw it was frozen, they wouldn't be able to proceed with opening the account so the thief would be thwarted.

Banks, however, use a different system to look at your checking and savings account history. It's called ChexSystems and it's focused on your past banking relationships rather than your past borrowing relationships.

If you've had a bank account involuntarily closed -- perhaps because you had a long history of overdrafting the account and having a negative balance -- this would show up on your ChexSystems report and could cause banks not to do business with you. But, of course, my husband had no red flags on his ChexSystems report, so the bank opened the account for the scammer and then allowed that person to cash the fraudulent check.

How to prevent this kind of fraud

After my husband realized that he had been the victim of fraud, he contacted the bank and it took care of everything including closing the improperly opened account and ensuring my husband didn't have to pay the outstanding balance needed to bring the account balance back to $0 since it was negative after the bad check was cashed.

Still, this was stressful for us and it took time to resolve. But, during the process, we learned that this could have been avoided if we had placed a security freeze on his ChexSystems report as well. This can be done online at the ChexSystems website and it works very similarly to the security freeze for your credit report, as it prevents financial institutions from accessing your record unless or until you provide special authorization.

We have since frozen my husband's ChexSystems account using this online website so we don't have to worry about this kind of problem happening again. The downside is if we need to open a new account, my husband will have to unfreeze his report. But since we know scammers out there have his info, we're willing to put up with this hassle to avoid fraudulently opened accounts in the future.

If you have been the victim of a data breach and know scammers have access to your info, it may be worth freezing your ChexSystems report as well as freezing your credit. That way, you won't have to deal with the trouble we did in getting a fraudulently opened account closed for good.