What is COB Fraud

COB fraud refers to a change of billing address scam, in which a criminal changes a victim’s billing address with a financial institution to prevent the victim.

COB fraud is meant to prevent victims from receiving bank or credit card statements tied to an account that a thief has gained access to and is stealing money from or making fraudulent purchases with. Scammers can also commit a crime similar to COB fraud by filling out a change of address form with the post office so that all the victim’s mail is forwarded to the thief’s address.

BREAKING DOWN COB Fraud

COB fraud also facilitates criminal activity by first changing a victim’s billing address with the financial institution: The thief can then use the changed billing address as the shipping address for online purchases.

This address change makes it easier to commit fraud by using someone else’s credit card to pay for goods and services that are delivered to the scammer. A mismatched billing and shipping address can raise red flags with the merchant; changing the billing address first so it will match the new shipping address may keep the fraudulent transaction under the radar.

Credit card companies and merchants have sophisticated ways of monitoring for COB fraud. For example, address change notification lets a merchant know if the cardholder’s billing address was changed in the last 45 days and that the merchant might want to take additional steps to verify the purchaser’s identity.

And by using sophisticated algorithms to detect changes from the cardholder’s usual purchase activity, credit card issuers often notice fraudulent transactions on a cardholder’s account before the cardholder is even aware of them. Also, financial institutions will usually email consumers who use their online services to let them know their billing address has been changed.

Consumers may not be able to prevent COB fraud, but they can keep an eye out for it by regularly reviewing their bank and credit card account statements and credit reports. COB fraud is unlikely to be effective if the victim regularly reviews his or her accounts online, where he can easily notice fraudulent charges.

Other Change of Address Scams

A recent consumer warning from AARP reminded readers that "anyone can walk into any U.S. post office and complete a change of address (COA) form to reroute your mail. Your sensitive documents would then be delivered to a new address that might be selected by a crook to gather information needed to steal your identity."

It's very easy for a crook to do this: all that's needed is for them to have your address and to forge your signature. Surprisingly, "the U.S. Postal Service does not require any identification," according to AARP. "Instead, you’ll be mailed a notice confirming the change of address. But that is easy to miss, or ignore. If you do nothing, the change goes forward."

The group suggests to not throw away notices from the U.S. Postal Service: "After a COA request is processed, the USPS sends an address-change confirmation to both your address and the forwarding address. Be careful not to mistake it for junk mail." It's important too to be on the lookout for missing mail, "if you get no mail addressed to your name for several consecutive days, contact your post office to determine if you’ve been victimized," and to be watchful in general.

"Routinely check your credit rating and review credit card bills for unexplained activity," AARP explains. "And if you haven’t already, put a freeze on your credit reports. These are essential tasks that will help protect you from financial fraud."