Credit reporting issues have consistently ranked among the top consumer complaints tracked by the Federal Trade Commission’s Consumer Sentinel Network. According to the FTC’s 2024 data book, reports related to credit bureaus and information furnishers surged by nearly 129% between 2022 and 2024, jumping from approximately 591,000 to over 1.3 million in just two years. This year, the growing spectrum of complaints range from inaccurate information offered by credit reporting agencies or data furnishers, to failures to reinvestigate disputed data, inadequate customer support, and unauthorized credit inquiries.
The credit reporting system is currently under siege from a sophisticated fraud typology — injecting false information that undermines its integrity and hampers lenders’ ability to accurately assess credit risk. Such fraud, reliant as it is on both passive and active manipulation of the credit bureaus’ mandatory processes, is contributing to both the volume and complexity of the disputes the credit bureaus receive, with a cascading effect on legitimate consumers.
Based on my ongoing research, an online market of fraud activity explicitly designed to manipulate the credit reporting infrastructure in our country is thriving. Here’s why fraud affecting the credit reporting system is so pervasive, including some of the evidence suggesting fraudsters’ are having success in manipulating the credit reporting industry.
How Credit Bureaus Are Being Exploited?
Credit bureaus are institutions that collect, manage, and distribute consumer credit data. Their primary function is to compile detailed records of individuals’ borrowing activity, including payment history, loan balances, account statuses, and credit limits. This data is used to generate credit reports and scores, which lenders rely on to assess a person’s creditworthiness and risk profile. Information furnishers are the companies that feed this data to the bureaus. These include financial institutions, credit card issuers, landlords, utility providers, and debt collectors, among others. Their reporting serves as the backbone of the credit ecosystem — ideally ensuring accuracy, consistency, and transparency. But increasingly, this ecosystem is being manipulated.
Credit bureau and information furnisher fraud refers to a range of deceptive practices that undermine the integrity of the consumer credit reporting system. On the credit bureau side, this includes the creation of synthetic identities using either stolen or false Social Security numbers (sometimes marketed as Credit Privacy Numbers or CPNs) and the fraudulent removal of legitimate debts or inquiries via bulk disputes or false claims of identity theft (known as “credit washing”). These practices are often advertised in the online fraud ecosystem and on social media as “credit repair” solutions.
Fraud involving information furnishing, meanwhile, also often revolves around credit boosting schemes, and is centered on the submission of fabricated or misleading credit data. A common M.O. involves fraudsters setting up shell entities and posing as lenders or landlords, registering these entities as data furnishers, and then reporting fake tradelines with positive information to a consumer’s credit report. Fraud involving information furnishing, meanwhile, also often revolves around credit boosting schemes, and is centered on the submission of fabricated or misleading credit data.
Why Is Fraud Against Credit Bureaus Thriving?
Credit bureau and data furnisher fraud is thriving due to a combination of technological vulnerabilities, weak oversight, social media accessibility, and high financial incentives.
Credit bureaus play a vital role in the financial lives of millions of Americans, including those new to credit. Their systems are designed to create new credit files to enable a young person or recent immigrant, for example, to begin to build a history and gain access to credit. As long as the synthetic data appears consistent and mimics typical consumer behavior, it’s treated as legitimate, allowing fraudulent credit identities to blend into the system undetected.
Similarly, credit bureaus conduct limited vetting when onboarding new data furnishers — particularly small entities or non-traditional businesses. This weak oversight enables fraudsters to either establish seemingly legitimate furnishing entities using publicly available templates, virtual business addresses, and online registration services, or purchase aged shelf companies that already appear credible. These shelf companies, often marketed on openly accessible websites, can be repurposed to pose as legitimate furnishers.
Because the credit reporting system is built in large part on the assumption that both individuals and furnishers act in good faith and play by the rules, fraudsters and fraudulent businesses can operate undetected for months, submitting false tradelines — including fictitious loans or credit cards with perfect payment histories — to construct synthetic credit profiles.
To carry out these schemes, fraudsters are leveraging clearnet websites and Social Media groups as easily accessible platforms to orchestrate credit reporting fraud, setting the stage for high-dollar scams and future bust-out operations. The presence of these markets on easily accessible websites gives interested parties effortless access to fraudulent services, further fueling the growth of this type of fraud.
To enhance perceived legitimacy and reputation, these vendors actively encourage their customers to leave positive reviews, much like legitimate businesses do. Many of these customers enthusiastically describe successful transactions with CPN providers. Based on my investigation into several of these reviews, I believe that many of the individuals posting them are real people — and that they have, in fact, used synthetic identities created with bogus SSNs to rent apartments, and in some cases, to attempt to open bank accounts or secure lines of credit.
With limited law enforcement action targeting clearnet advertisers and a sluggish regulatory response, the risk-reward balance heavily favors fraudsters. Inflated credit profiles—built using synthetic identities and false tradelines—can be leveraged to obtain auto and apartment leases, personal loans, credit cards, and ‘buy now, pay later’ (BNPL) financing. In many cases, these profiles are also used in bust-out fraud schemes, where fraudsters max out credit lines, quickly convert the funds to cash or goods, and then abandon the accounts entirely—leaving lenders with unrecoverable losses.
The Ripple Effects of Credit System Exploitation
Fraudulent activity targeting credit reporting pollutes the system for everyone — consumers and financial institutions alike. When synthetic identities, CPNs, credit washing and other credit boosting scams based on false disputes clog up the system and corrupt the data, everyone is harmed.
From the consumer perspective, it is critical to highlight that fraudsters often exploit vulnerable individuals—such as those with poor credit, no credit history, or those who are experiencing financial hardship—by falsely presenting their schemes as legitimate financial tools.
From the perspective of the financial industry, this emerging trend poses significant risks to lenders who depend on the integrity of credit reports to properly assess and manage risk, a core component of a safe and sound banking system. When credit reports are fabricated or manipulated through the use of fake furnishers and CPNs, lenders may inadvertently approve loans for synthetic identities or extend credit to individuals without the capacity to repay, leading to losses from charge-offs and defaults.
The credit reporting system is a vital component of the American economy. Fraudsters recognize this importance and leverage regulatory and internal process gaps for their own illicit gain. Protecting the integrity of the credit reporting system must be a shared priority across regulators, financial institutions and consumer advocates, not only to safeguard economic stability, but to ensure vulnerable consumers are not exploited or criminalized by increasingly sophisticated forms of fraud.