While certain forged documents sell for thousands on the dark web, such as a passport from an EU country for $3,000, acquiring fake documents and digital copies is now easier than ever. Bad actors create special templates that help others create counterfeit documents practically for cents. This trend is natural given the technological advancements in AI and digital onboarding processes that require government-issued IDs or Proof of Address (PoA) documents. These advancements have created a niche for criminals looking for simpler methods to produce cheaper and more convincing document replicas.
Among the popular targets for forging, utility bills take the lead. These documents are widely used for verification because almost anyone who owns or rents a home pays for their utilities. These documents also have the person’s name, address, issuing date, and other important details, serving as a tool for address verification in many regulated industries, including banking, fintech, crypto, lending, etc. For example, mortgage companies rely on utility bills as a way to check the person’s current residency and creditworthiness in order to grant or deny financial access.
But can you distinguish a fake utility bill from the real deal? We review the main signs of forgery and explain how fraudsters use these documents for their benefit.
What is Considered a Utility Bill?
A utility bill is a statement that details charges for services like gas, water, electricity, or internet. Any document from a utility service provider that includes the issuing date, the person’s name, address, and usage charges qualifies as a utility bill.
Utility bills are an accepted form of PoA used in the address verification process. Regulated industries, such as financial service providers and cryptocurrency platforms, are required to use these documents to verify their customers’ addresses and comply with customer due diligence (CDD) requirements.
Why are Utility Bill Checks Necessary?
Utility bill checks are security processes designed to confirm that the person providing the document is real and that they really reside in the registered address. This is a legal requirement in many jurisdictions before obtaining a loan or opening a bank account. Fraudsters use fake documents, including forged utility bills, to commit all sorts of illegal things, including money laundering under stolen identities.
Some criminals particularly target financial institutions with less stringent security checks or those who handle a large volume of transactions and can potentially miss fraudulent applications. This is a relevant issue today since the post-pandemic economic conditions and wars in the world have led some lenders to rely on manual document reviews. Many alterations aren’t visible to the human eye and can be time-consuming to detect compared to automated verification. That’s why AI-powered software offers a more efficient solution for verifying utility bills.
Related: How to Combat Document Forgery?
What Motivates People to Create Fake Utility Bills?
Some people don’t feel comfortable enough to share their personal information, let alone their address. This is common when users are asked to upload a photo of their utility bill or their ID document. The reason behind this is that some platforms don’t disclose enough information to the customer about why they’re asking for such documents. Another reason is that some industries, like adult dating apps or crypto platforms, have deep roots in being more anonymous.
For example, most legitimate crypto platforms won’t allow users to receive Bitcoin in their wallet without proper identity verification. Marketplaces like Vinted also accept utility bills as PoA documents now before confirming any changes in the user’s profile, for example, when they want to change the personal details on their profile, such as their email address, to prevent account takeover (ATO) fraud and identity theft.
So, without proper knowledge from the user’s side, some might think that removing their real address and replacing it with another (fake) one won’t make a huge difference to the institution. They may think that concealing their actual residency will protect them from potential data breaches, especially if they don’t trust the service provider.
Reasons Why Fraudsters Use Fake Utility Bills
It’s only natural that criminals have bad intentions; therefore, they use document forgery to gain financial benefits.
Typically, fraudsters fake utility bills for several reasons, including:
🔴 To Obtain Funds from Special Programs
Unemployment fraud remains a popular scheme used by bad actors. However, it reached its peak during the pandemic when many found document forgery a way to access funds from various programs both for businesses and unemployed individuals in need. The Secret Service estimates that over $100 billion was stolen this way, with criminals pretending to run small businesses needing funds from various programs, including the CARES Act.
Fraud is also an issue in the academic world where not only students forge documents to access student loans or get enrolled into a program but also faculty members. A recent audit showed that a professor at Morgan State University fraudulently obtained $200,000 in funded research grants from the National Science Foundation’s Small Business Technology Transfer program and attempted to access another $500,000. He used the money for personal expenses, such as credit or mortgage payments. Later, the professor was sentenced to prison.
🔴 To Steal Personal Information
Fraudsters often use phishing to steal another person’s data. This principle applies to phishing scams linked to manipulating people due to high utility costs. For example, scammers often pretend to offer discounts on energy bills or phish for information by offering better deals on energy switches. Alternatively, if you google “fake utility bill template,” there are special programs that help create a decent-looking utility bill from scratch, helping criminals succeed with their malicious acts.
There are other similar scams linked to utilities. For example, criminals have been scamming customers by claiming the government is providing “credits” for utility bills. In this scam, bad actors ask people for their SSNS in order for them to apply for the credit. After obtaining personal data, criminals provide a fake bank routing number. This makes it seem like the bill is credited or paid, but no funds are actually applied.
🔴 To Secure Loans
Depending on the jurisdiction, some fintechs and other money services businesses (MSBs) provide loan services, which have less stringent security requirements. Criminals use this loophole to submit fake paperwork. This includes forged utility bills to hide bad credit. Some fraudsters even produce fake billing statements from providers like Pacific Gas & Electric Co. to trick other customers and steal information, as explained previously.
In general, to access any credit and debit cards online, you should open a bank account and go through standard due diligence, which often consists of a KYC check and a PoA check. This means the customer needs to submit a copy of their government-issued ID and a utility bill or other acceptable PoA document. The institution will also perform a credit check on the user’s submitted information and run a quick background check.
More importantly, unpaid or late utility bills can negatively impact the customer’s credit score. So, if the person has bankruptcy notices or any other signs of bad credit, they will be denied access to the loan. For this reason, fraudsters steal identities and forge utility bills to submit loan applications in another name, especially if they have bad credit.
Related: What is Loan Fraud?
How Does a Fake Utility Bill Affect the Bank?
Accepting a fake utility bill for banks and other financial institutions automatically means negative consequences.
For example, an image approving a loan that does not display accurate information and provides forged details can lead to substantial fines, including:
- Financial losses. For the bank, this includes potential non-compliance fines and higher operational costs.
- Legal penalties. They depend on the severity of the fraud. For example, some lenders can be required to compensate the victims for their losses.
- Criminal charges. This also depends on the offense. Some criminals can be sentenced to prison for forging documents.
- Lost trust. For the victim, this can lead to reduced trust and harmed reputation for the institution.
- Business closure. Some smaller banks can be left with one solution — closure, particularly when involved in severe fraud cases.
To prevent these issues, companies implement strong due diligence measures and check the legitimacy of user’s data, including the submitted personal information, like their name and address. This helps not only prevent security challenges like accepting forged utility bills, but also improve the overall fraud prevention system of the business while protecting their customers and minimizing chances of criminal activity.
Related: Financial Crime Compliance — Comprehensive Business Practices
How Can You Detect a Fake Utility Bill?
A proper utility bill comes from a genuine utility bill company that has a consistent and simple billing system that is accessible online. Typically, users can check their payment plan and transaction history with the account balance details in one place. Genuine utility service providers have automated emails and texts. Anything coming from a fishy source or not a professional address is a scam.
Common signs showing that the utility bill is fake include:
- Rounded numbers
- Spelling errors
- Incorrect or missing full name information
- Poor quality of the logo or other images
- Inconsistencies in font sizes and font types
- Unusual alignments or spaces between characters
- Bad equations, especially when the numbers don’t add up compared to the previous bills
- Inconsistencies in other elements
To avoid getting tricked, customers should log in to the service provider’s website directly and check their balance. A legitimate utility service platform should always have a customer service phone and offer an easy way to get in touch with them. Other good signs of legitimate services include clear information about fees, a consistent Terms and Conditions page, and a transparent policy on any changes regarding utility services.
For businesses, scaling and accepting a large volume of new user registrations along with a bunch of document checks is impossible without any sort of automation.
At iDenfy, we help you balance out security and efficiency with KYC/AML and KYB software and tools like AI-powered utility bill verification solutions, along with other document verification measures that quickly decline fraudulent applications before they actually reach your platform.
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