Address FraudWhat Merchants & Consumers Need to Know About Fake Address Scams

April 25, 2023 | 16 min read

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Address Fraud

In a Nutshell

Can your address be used to commit fraud? In this article, we'll take a deep dive into the world of address fraud. We'll discuss what it is, how it works, and common scenarios involving address fraud. We’ll also look at some of the warning signs for consumers and merchants, and how everyone can prevent becoming a victim.

Unmasking Address Fraud: How to Spot it — and Stop it — Once and for All

Picture this: you’re an online merchant, and you're contacted by a customer who is demanding a refund for items they never received.

Naturally, you try to verify the information the customer provides about the transaction. You check the address to authenticate the buyer’s identity… but the addresses don’t match. When you look a little closer, other details seem to have been changed without the customer’s knowledge.

What happened?

Your buyer might’ve been hit by an address fraud scheme. This isn’t a new trick by any stretch of the imagination. But, given the rise of digital commerce, its frequency and scope have increased significantly in recent years.

What is Address Fraud?

Address Fraud

[noun]/ǝ • dres • frôd/

Address fraud is a tactic by which fraudsters use stolen credentials to access a user’s account and change their physical address information. Address fraud enables other fraudulent behaviors, like redirecting goods purchased by an authorized user to the fraudster’s address.

Address fraud is a type of identity theft that occurs when a fraudster uses someone else's physical mailing address, or even a fake address, to facilitate illegal activities.

This can include obtaining credit, goods, or services under false pretenses. It can also apply to other criminal schemes, though. In essence, it could also involve any case of fraud that's dependent on a fake address — opening a bank account, school enrollment, insurance schemes, etc.

This often happens when a criminal impersonates someone else to provide false mailing address information about that individual. For instance, one may impersonate a consumer and contact the Post Office, claiming that the victim has moved to a new address (i.e., the fraudster’s address). The fraudster requests that all mail be forwarded to this new location, so they begin receiving the victim’s mail, including potentially sensitive information.

Address fraud can impact both consumers and merchants, resulting in financial loss and reputational damage for both parties. Resolving the situation is a long, time-consuming process.

How Does Address Fraud Work?

There are a lot of different practices that fall under the umbrella of address fraud. The exact scheme depends on the fraudster's intentions and the specific type of address fraud being executed. However, the steps and methods criminals might use to commit address fraud generally go as follows:

Information Gathering

The first step in committing address fraud typically involves obtaining a target's address. This can be achieved through dumpster diving for discarded mail, stealing physical mail from mailboxes, purchasing information from data breaches, or conducting targeted online searches to find addresses of potential victims.

Creating a False Persona

Once the fraudster has acquired an address, they may proceed to take over the user’s identity, or even create a false identity from scratch using the address. The fraudster may even make up a fake address using synthetic fraud tactics. This could involve fabricating documents like utility bills, bank statements, or other official papers to establish a seemingly legitimate identity associated with the address.

Linking to Stolen Identities

In some cases, the criminal might link the stolen or fabricated address to an existing stolen identity, further complicating the fraud. This could be done by updating the address on a stolen credit card or using the address to apply for new credit under the stolen identity.

Exploiting the False Identity

With a fraudulent identity established, the perpetrator can now use the address to carry out a variety of illegal activities. For example:

  • Opening bank accounts or applying for credit in the victim's name
  • Ordering goods and services with no intention of paying for them
  • Intercepting mail deliveries
  • Evading the law or hiding from creditors with a false paper trail
  • Trying to enroll a child in a different school
  • Withdrawing funds from a victim’s bank account
  • Money laundering or drug trafficking

Covering Their Tracks

Fraudsters may take additional steps to conceal their activities and avoid detection. This might include setting up mail forwarding to another address, intercepting mail deliveries, or using multiple addresses. This will help minimize the risk of being caught, and thereby let them continue using the fake identity as long as possible.

Cashing In

The ultimate goal of address fraud is to profit from the deception. This could involve making purchases using fraudulently obtained credit, withdrawing funds from the victim's bank accounts, or selling goods and services acquired under false pretenses.

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Common Examples of Address Fraud

So, we’ve got a basic rundown of how these attacks are often conducted. However, address fraud can manifest in various forms, each with its unique set of methods and goals. What are some specific address scams that readers should know about?

The following are some of the most common types of address fraud that individuals and businesses may encounter:

Residential Address Fraud

A criminal uses a victim's residential address to open bank accounts, apply for loans, or obtain credit cards in the victim's name without their knowledge. The victim may only become aware of the fraudulent activity when their credit score is negatively affected or they receive debt collection notices.

Business Address Fraud

Similar to residential address fraud, business address fraud involves using a legitimate business address to make unauthorized purchases or apply for credit in the company's name. This type of fraud can lead to financial losses for the business and potentially damage its reputation.

Mail Forwarding Fraud

In mail forwarding fraud, the criminal sets up mail forwarding for a target's address without their knowledge or consent. The perpetrator then receives the victim's mail, which may contain sensitive information that can be used for additional fraudulent activities. For instance, opening new accounts or making unauthorized transactions.

Fictitious Address Fraud

With this type of fraud, a criminal creates a fake address to evade detection by law enforcement, conceal their identity, or facilitate other illegal activities. Fictitious address fraud can involve registering vehicles, obtaining driver's licenses, or establishing businesses using the false address.

Package Interception Fraud

A criminal uses a stolen credit card to make online purchases, then ships the goods to the victim's address. The perpetrator intercepts the packages before the victim becomes aware of the delivery, though. In some cases, the criminal may even ask the victim to forward the package to another address, making the victim an unwitting accomplice in the fraud.

Rental Scams

A fake landlord or tenant uses fraudulent addresses to deceive prospective renters or property owners. This can involve collecting security deposits for properties they don't own, or renting out properties they have no right to rent out. For fake tenants, it could mean using a false address to avoid background checks and application fees.

Utility Fraud

A criminal uses a victim's address to establish utility services, such as gas, electricity, or water, without their knowledge or consent. The victim may only become aware of the fraud when they receive bills for services they did not request, or when the unpaid bills negatively impact their credit score.

Consequences of Address Fraud

Address fraud can have wide-ranging and severe consequences for both consumers and merchants. The following are some of the key impacts and challenges faced by consumers and businesses as a result of address fraud:

Consequences for Consumers

Consumers, whose personal information may be used to facilitate address fraud, will bear the initial costs of these scams:

Financial Losses

Consumers may face financial losses if they’re held responsible for fraudulent transactions made using their addresses. This could include unauthorized purchases, loans, or credit card charges.

Damaged Credit Ratings

Unauthorized loans or credit cards taken out in the consumer's name can lead to missed payments or defaults. This would hurt the victim’s ability to obtain future credit, loans, or even secure housing and employment.

In some cases, consumers may be legally implicated in criminal activities carried out using their addresses. Clearing their name and proving their innocence can be a time-consuming and stressful process.

Time & Effort

Consumers must work with financial institutions, credit bureaus, and law enforcement agencies to rectify the situation. This can be a lengthy and demanding process.

Emotional Stress

Being a victim of fraud can be an emotionally taxing experience. Consumers may be left feeling violated, vulnerable, and frustrated by the process of regaining control of their personal and financial information.

Consequences for Merchants

In the end, though, most cost end up getting passed along to merchants through the dispute process, along with other consequences:

Financial Losses

Merchants may face financial losses, including chargebacks from unauthorized transactions, non-payment for goods or services, and the costs associated with investigating and resolving fraud cases.

Reputational Damage

Customers may perceive the business as insecure or unreliable. This can lead to a loss of customer trust and loyalty, ultimately impacting the business's bottom line.

Operational Challenges

Operational challenges for merchants, such as increased customer service inquiries, the need for additional security measures, and the time and resources required to investigate and resolve fraud cases may result.

Increased Costs

Address fraud can lead to higher costs due to the expenses associated with implementing fraud prevention measures, handling chargebacks, and dealing with the fallout from fraudulent transactions.

Merchants may face legal and regulatory consequences, like fines and penalties, if found to be negligent in their handling of customer data or their response to fraudulent activities.

Whichever way you slice it, address fraud is bad news for everyone. That said, how can consumers and merchants tell when they’ve been targeted? And, what can members of either group do to stop it?

Address Fraud Warning Signs: Consumers

There are a few ways consumers can tell if someone has hijacked their address for another scheme or is diverting their mail. The following are some red flags that may indicate address fraud:

  • Unexpected Mail: Receiving mail or packages addressed to someone else, or for items you didn't order, could be a sign of address fraud.
  • Unfamiliar Accounts or Charges: Discovering unfamiliar accounts, loans, or charges on your credit report or bank statements.
  • Inaccurate Personal Information: Receiving letters or bills containing inaccurate personal information, such as an incorrect name or address.
  • Missing Mail: Not receiving your mail? Or does it appear that mail has been tampered with? This could indicate someone is intercepting or forwarding your mail.
  • Debt Collection Notices: Receiving debt collection notices for accounts you didn't open, or loans for which you never applied? This may be another sign.
  • Credit Report Inquiries: Regularly checking your credit report can help you spot unauthorized inquiries or new accounts opened using your address.
  • Suspicious Emails or Calls: Be cautious of unsolicited emails or phone calls asking for personal information. They could be an attempt to gather information.
  • Denied Credit or Services: If you're unexpectedly denied credit or services due to poor credit history or suspicious activity, this may be a sign of address fraud.
  • Changes to Your Online Accounts: Notifications about changes to your online accounts, such as updated shipping addresses or new orders.

Being aware of the warning signs of address fraud can help consumers take prompt action to protect their personal and financial information.

What about merchants, though? What role should they play in helping to detect and prevent address fraud?

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Address Fraud Warning Signs: Businesses

Merchants must also be vigilant in identifying potential address fraud, as it can lead to financial losses and reputational damage. The following are some warning signs that may indicate address fraud from a merchant's perspective:

  • Multiple Orders to the Same Address: Receiving multiple orders from different customers shipping to the same address is a red flag, especially if the items ordered are of high value or easily resold.
  • Address Mismatches: When a customer's billing and shipping addresses don't match, or the shipping address is in a different country.
  • Unusually Large Orders: Large orders that are inconsistent with a customer's typical purchasing behavior, particularly if the orders involve high-value items or express shipping.
  • Multiple Payment Methods: If a customer uses multiple credit cards or payment methods to complete a single transaction or a series of transactions.
  • Transaction Velocity: A series of transactions made in quick succession from the same IP address or using the same shipping address.
  • Customer Complaints: If you receive customer complaints about not receiving their orders or if the orders were shipped to the wrong address, this may indicate address fraud.
  • “High-Risk” Destinations: Be cautious of orders shipping to destinations known for high rates of fraud or where reshipping services are prevalent.
  • Unusual Shipping Requests: Watch for customers who request shipping to a third party, such as a "friend" or "relative," or who ask for packages to be left in a specific location rather than delivered to the shipping address.

This list is by no means exhaustive. There are seemingly infinite ways in which mailing addresses and credentials can be used against consumers, merchants, and financial institutions. But how can potential victims protect themselves and their businesses in the long term?

Preventing Address Fraud

Both consumers and merchants can take proactive steps to minimize the risk of becoming a victim of address fraud. Merchants may not be directly affected by address fraud schemes. However, they face financial impacts like chargebacks for purchases that never arrive at the cardholder's doorstep.

It doesn’t matter whether an attack is centered on an individual or business. In either case, awareness and planning are excellent ways to prevent address fraudsters from succeeding.

Tips for Consumers

Some tips and best practices we recommend for consumers to adopt as protections against address fraud include:

01 | Going Paperless

While this might seem slightly counterintuitive, selecting paperless billing can place an additional security layer between mail recipients and fraudsters. To take that further, we would also advise account holders to set up a billing-specific email address that will be difficult for fraudsters to gain access to in a typical online breach.

02 | Using a P.O. Box

There are many good reasons to own a Post Office box, but one of the best is to use it to keep personal addresses separate from other business information. Material like billing, banking, and other hard financial data could be more secure if sent to a P.O. box, rather than being left in an easily-accessible mailbox.

03 | Setting up Two-Party Authentication

Users should take advantage of two-party authentication for online accounts whenever available. A cybercriminal who has a user’s account credentials will still be required to verify themselves via SMS or email before any changes can be made. It puts in place an additional layer of verification that wasn’t there before.

04 | Using a Password Manager

Most incidents of identity theft and address fraud are the result of passwords being compromised via email and social media. Combatting this vulnerability is crucial to preventing fraud. Utilizing password management software like 1Password can help cardholders and merchants keep their data locked down tight.

Tips for Merchants

So, those are a few tips for consumers. What about merchants, though? To defend against address fraud, we suggest that merchants:

01 | Implement Strong Authentication Measures

Use strong customer authentication processes, such as AVS (address verification services), multi-factor authentication, or 3D Secure, to verify the identity of customers during transactions.

02 | Employ Fraud Prevention Tools

Use a variety of fraud prevention tools, such as geolocation tracking, IP address monitoring, and device fingerprinting, to identify suspicious transactions and detect potential fraud. Ensure that these are deployed as part of a multifaceted, multilayer strategy.

03 | Monitor Transactions

Regularly review transactions for signs of address fraud, including multiple orders to the same address, mismatched billing, and shipping addresses, or unusually large orders. Keep tabs on new developments in fraud trends and behaviors.

04 | Establish Clear Policies

Develop clear policies for handling returns, refunds, and chargebacks to minimize the risk of fraud. Ensure that these policies are followed closely, yet are flexible enough that they can be adapted to individual customers’ needs.

Need More Help?

By implementing the preventive measures outlined above, both consumers and merchants can significantly reduce the likelihood of falling victim to address fraud.

Being proactive in safeguarding personal information and financial data, monitoring transactions, and staying vigilant for warning signs of fraud are critical steps in combating address fraud. For merchants, though, we have to note that fraud detection can be a little more complex.

Not all fraud comes from conventional, third-party criminal sources. That’s why we also strongly recommend seeking professional assistance to handle more difficult-to-manage loss sources, like friendly fraud.

For merchants who wish to limit their vulnerability to address fraud and related chargebacks, Chargebacks911® can help. Call us today for a free ROI analysis that can prove prevention is the best medicine.


Can someone commit fraud with your address?

Yes. Address fraud is a type of identity theft that occurs when a fraudster uses someone else's address, or a fake one, to facilitate illegal activities. This can include obtaining credit, goods, or services under false pretenses, or it can be used to facilitate other criminal activities.

What to do if your address is being used for fraud?

The first thing to do is contact the USPS to report and correct any instance of address fraud. Next, any letters or packages received under someone else’s name should have “not at this address” written on them clearly before they are returned to the post office.

What is an example of address fraud?

For example, package interception fraud occurs when a criminal uses a stolen credit card to make online purchases and then ships the goods to the victim's address. The perpetrator then intercepts the packages before the victim becomes aware of the unauthorized transaction. In some cases, the criminal may ask the victim to forward the package to another address, making the victim an unwitting accomplice in the fraud.

Is it illegal to say you live somewhere you don't?

Yes! Consumers who fake their addresses could run into potential legal trouble.

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