Consumer fights utility charges someone else racked up

This article has been updated with additional comment from the Public Utility Commission of Texas.

NBC 5 Responds to a consumer fighting a more than $500 electric bill, he says, doesn’t belong to him. He lives in Arizona but learned his identity was used to power a home in North Texas. Read on for what happened and why some electric companies say this type of fraud is growing.

‘I DON’T LIVE IN TEXAS’

More than a thousand miles away in Phoenix, Derrik Posthumus took a call about an overdue, Texas-sized electric bill.

“I get a call from collections and they're saying, you owe us $593 for electricity. I'm, like, huh?” Posthumus said.

The caller said Posthumus owed Discount Power for service in Euless, Texas. Posthumus said he’s never lived in Texas.

“I don’t know anyone in Texas,” said Posthumus.

Posthumus said he filed a report with the FTC and tried to reach someone at the service address in Euless, “I was trying to be the investigator, but it's very hard when you're in another state.”

After Posthumus contacted NBC 5 Responds, we connected with Discount Power, part of NRG Energy. It told us Posthumus was a victim of ID theft.

“We’re actively working to protect customers and combat against this type of scam. When instances of fraudulent enrollment occur, our escalated issues team works with the customer to offer a quick resolution of the issue,” a spokesperson wrote.

Discount Power adds, “We’ve advised the customer that he is not responsible for the charges and have notified the credit reporting agency.”

Posthumus said he’s frozen his credit, changed his passwords and is watching for any sign his name is used to cash in.

‘IT’S A HUGE PROBLEM’

Posthumus said he dug into his junk mail and found an agreement for a new electric service in Houston. We contacted that electric company, Flagship Power. It told us Flagship Power never started the service because it suspected fraud.

Tom Schmitt, co-founder of Flagship Power told NBC 5 Responds, that this type of scheme costs electric companies millions.

“It’s a huge problem,” he said.

Reporter Diana Zoga asked, “Help us understand who loses in this situation.”

“You do,” Schmidt said. “As the electricity company incurs more expense, they have to charge the higher rate to all the customers. In other words, you protected your credit card and your Social Security number. You're still paying more for your electricity because of this fraud.”

To apply for new electric service, consumers typically provide a name, date of birth, Social Security number or driver’s license number for a credit check.

Flagship Power CEO Rob Cantrell, in the electric business for 20 years, said he suspects crime rings use personal information, exposed elsewhere online, to apply for service.

“They're looking at ways to monetize those stolen identities. One of the ways to monetize that is to take cash from a consumer and use one of those stolen identities to sign up for service at a specific location,” Cantrell said.

Flagship Power said it has fraud detection layers like matching the applicant’s Social Security number to the name or looking at the IP address.

Even so, Cantrell said the problem persists in the industry, “If you look at across Texas, it would surprise me if that total number is less than $100 million per year.”

We asked the Public Utility Commission of Texas about this type of fraud. A spokesperson tells NBC 5 the PUCT does not collect data on instances of fraud.

The PUCT wrote, “Retail electric providers (REPs) in Texas will typically request the name, phone, email, and address of requested service from customers when they receive a request for new service. Most REPs will run a credit check to verify the information. The Public Utility Commission of Texas strongly encourages any consumer who thinks they may be a victim of fraud to report it to the proper law enforcement authorities.”

It shared a link to the Texas Office of the Attorney General’s online consumer protection resources.

CONSUMER STEPS

For anyone watching, Dr. Mitch Thornton, executive director of SMU's Darwin Deason Institute for Cyber Security said consumers should operate as if their identities have already been stolen.

“There have been so many large data breaches in the past that chances are your Social Security number and name and birthdate, etc... are probably compromised already. If they're not, you should assume they are,” said Thornton.

For consumers, there are general steps you can take to help monitor your identity.

Thornton recommends freezing your credit proactively. You could temporarily unfreeze it if a creditor needs access. Change your account passwords and stop reusing them.

Thornton said: think twice about what you post online. If a criminal can’t crack your password, they may find enough information to answer your account security questions.

“If you're not careful, you'll give away information like maybe your first child's name or a birthday or your first car,” Thornton explained.

Dr. Thornton told our NBC 5 Responds team he also recommends consumers go through bank and credit card statements, line-by-line, at least once a month.

It's generally important to monitor your credit reports too. The reports show bank, credit, and loan accounts in your name, along with payment history. By law, consumers are entitled to view their credit report once a year at no charge. All three major credit reporting bureaus now offer online reports free once a week. You can start here to request your free credit reports.

To request a credit freeze, contact each of the three credit reporting bureaus. Here’s how to contact Transunion about a security lock or freeze. Here is how to freeze your credit file with Experian. Here is information about locking or freezing your credit report with Equifax.

As the Federal Trade Commission explains, there are additional fraud alerts available. You can read about the different types of alerts here. For a fraud alert, the FTC writes you can contact any one of the three credit bureaus. The one you contact must tell the other two to place the fraud alerts on your credit report.

You can watch this story for more on what to do if you find a mistake on a credit report.

NBC 5 Responds is committed to researching your concerns and recovering your money. Our goal is to get you answers and, if possible, solutions and a resolution. Call us at 844-5RESPND (844-573-7763) or fill out our customer complaint form.