Fraudsters are constantly discovering and evolving new ways to make the fake identities they're using look more legitimate. Could Active Duty Alerts – a tool that makes it harder to open accounts – actually be helping them?
What is an Active Duty Alert?
Active Duty Alerts are a type of marker offered by the credit bureaus to help US service members avoid becoming victims of fraud. They operate by permitting an active-duty service member to contact one of the credit bureaus to note that they're on active duty, leading to an alert being placed on their identity. That credit bureau will then forward the alert to the other two major credit bureaus.
Unlike a credit freeze, these alerts don't prevent accounts from being opened in the service member's name, but they do provide a marker that is visible to lenders, and encourages them to perform extra verification steps.
While the credit bureaus do ask users to formally certify that they are active-duty military members, they do not appear to check whether the applicant is genuinely in the military. In a test, SentiLink was able to add an active duty alert to a non-military identity fairly easily.
How might fraudsters misuse Active Duty Alerts?
As experts in synthetic fraud, SentiLink was curious as to whether an Active Duty Alert, in combination with a randomly-issued SSN, might be a signal of potential synthetic fraud.
Because the Social Security Administration did not begin randomly-issuing SSNs until June 2011, most holders of randomly-issued SSNs are (as of this writing) younger than 14 years old. This is too young to join the U.S. military, every branch of which has a minimum age of 17 for enlistment. While there are a variety of reasons an older person might legitimately have a randomly-issued SSN, it stands to reason that the vast majority of randomly-issued SSN holders are not active-duty military members.
However, synthetic fraudsters often use randomly-issued SSNs for the identities they're inventing. And while adding an Active Duty Alert with the credit bureaus can make opening an account more difficult, the primary challenge synthetic fraudsters face is convincing lenders that their identity is real in the first place. If a lender sees the Active Duty Alert as a "sign of life" – an indication the applicant identity is a real person – adding an Active Duty Alert could potentially benefit synthetic fraudsters.
And if lenders don't suspect synthetic fraud, the fraudster may be able to beat whatever additional verification steps the Active Duty Alert triggers – for example, by using forged documents made with PhotoShop and/or generative AI to beat a document verification challenge.
Investigation: are synthetic fraudsters misusing Active Duty Alerts?
To determine whether this M.O. is in widespread use by synthetic fraudsters, SentiLink sampled 1M identities with randomly-issued SSNs and analyzed them to look for Active Duty Alerts.
The good news is that based on our research, very few identities with randomly-issued SSNs also have Active Duty Alerts. In total, out of the million identities we sampled, we found just 13 that had Active Duty Alerts. The bad news is that five of those 13 identities were associated with synthetic fraud activity.
It appears, therefore, that while synthetic fraudsters are not misusing Active Duty Alerts on a large scale, there does seem to be an association between Active Duty Alerts on random-SSN identities and synthetic fraud.
However, this research and previous research we've conducted into Active Duty Alerts uncovered many identities with Active Duty Alerts that did not seem to have any indications of military service. In many cases, we saw the Active Duty Alerts were added at the same time as other credit alerts such as security freezes or right after freezes ended. This might indicate that some consumers are misunderstanding the purpose of Active Duty Alerts, or attempting to use them for additional identity protection even though they're not in the military.
Conclusion
While we don't think that fraudsters are leveraging Active Duty Alerts to create fake signs of life for synthetic identities, our research also suggests that an Active Duty Alert should not be viewed as an ironclad indicator that the applicant identity is genuinely on active duty, or has any sort of connection to the military.
