A new kind of fraud?

Hot on the heels of our PayPal account being hacked two days ago, we discovered this morning that someone has been writing hot checks using our Centerpointe address, but it's still unclear whether they've also used any other facet of our identities.

I'm posting about this because it *might* be related to the fact that our house is brand new and therefore this info might be useful to other Section 9 buyers.  

The story goes like this.  My name for this blog posting purpose is "Johnelle Smith".  When I received mail addressed to "John Smith" at my address, I naturally assumed the firstname was a typo, and so I opened those envelopes.  

It turns out that one was a hot check collection notice from Kroger, and the other was an Affidavit of Fraud pursuant to a hot check that had been written by "John Smith" at Lowes hardware store.  

I called the Kroger and they revealed that the check was written on a Wells Fargo account at a Kroger in Fort Worth, and they gave me the associated checking account number.  We have no financial accounts with Wells Fargo, so obviously this wasn't an account related to us, at least not directly.  

Between the time they issued the collection notice and the time I called, Kroger had already figured out that this was a fraudulent account and so the CSR noted that they were not going to attempt to take further action at me or anyone else at my address, but the obvious questions for me still remained:  What is this all about, how did it happen in the first place, and how deep does the fraud go?

Telephone calls to Wells Fargo revealed that I needed to go to a local branch in person and present my ID in order to make inquiries, so I did.  The Wells Fargo CSR was only able to tell me the following:

1. The person whose name was associated with the hot checks was not in the Wells Fargo computer system.
2. There IS an active Wells Fargo account by that number, but because I'm not a signatory to that account, they can't disclose to me any information about whether there's been any fraud on it or what actions (if any) were taken with respect to it.

But here's the interesting part:  As the local CSR was talking on the phone with a Wells Fargo fraud expert, she turned to me and asked, "Is your house brand new?"  Her tone of voice had an "ah-hah" quality to it, like perhaps she was really saying, "Your house is brand new."  This is what made me wonder if this isn't a particular kind of fraud specific to new home construction.  What would have prompted her to ask that question?  There are 80,000 people in League City and only a few hundred of them live in homes that could be described as "brand new", so this does not seem like a statistically-obvious first question to ask.  

Based on the desperately-limited information that has been divulged to me so far, this is what I suspect happened:  

1. "John Smith" went trolling through the public records to find a person whose name closely resembled his own and whose address is still virgin by computer databasing standards.  Partly because our house is so "brand new", about the only public place where my full name and address have been published together is the Galveston County Appraisal District.  
2. "John Smith" then had fake checks printed up using his name, my address, and a third party's actual checking account number (possibly that he got because he is a dumpster diver, or maybe he worked as a cashier somewhere and lifted a number at random off a check he processed??). 
3. "John Smith" then personally passed his fake checks at local businesses.  Of course he would have had to show his ID in order to do that, and if he used his TDL, it's address would not have matched my Centerpointe address that he had printed on his checks.  But at that point, "John Smith" could have pleaded that it was a "brand new house" and therefore TxDPS had not issued his updated TDL yet (and in fact TxDPS does take a long time to process those requests).  Even if one of the receiving merchants had parsed my address, they would have seen "Johnelle Smith" and maybe not thought twice about the apparent typo.  And because "John Smith" was using a valid third party's checking account number, his fake checks would have cleared.  

I don't know if there's any validity to those suspicions above - I'm still very much looking into this.  I'm also trying to figure out whether "John Smith" might have fraudulently switched his TDL address to mine, but so far all I get from TxDPS is the usual "We are unable to assist you due to high call volume.  Please try your call again later."  

If and when I am able to discover more about this type of fraud, I'll follow up with additional posts or by making comments below.  

Meanwhile, if you are a new home buyer in particular, watch carefully for suspicious items appearing in your mailbox, and please contact me if something similar to this has happened to you.  Two heads would be better than one in figuring out how something like this could happen, and how extensive the associated damage actually is.