Scammers fake student identities to siphon aid payments

Fraudsters are increasingly using stolen and synthetic identities to apply for student aid and financing, according to a recent warning from the Financial Crimes Enforcement Network (FinCEN). While the warning is directed at financial institutions, it serves as a critical heads-up for any business in the education and tutoring space that facilitates tuition financing or government-backed aid. These 'diploma mills' or fake student schemes involve bad actors enrolling in programs solely to capture financial aid disbursements, often leaving the institution with chargebacks or unpaid balances once the fraud is discovered. For tutoring centers and private educational operators, this means identity verification is no longer optional. If you offer in-house financing or work with third-party lenders, you are a target for these identity theft rings. The scammers often use 'mule' accounts to funnel money, making it difficult to recover funds once they are sent. You should expect your financing partners to tighten their KYC (Know Your Customer) requirements. If you manage your own billing or payment plans, now is the time to audit how you verify the identity of the person signing the contract versus the person receiving the services.

Source: Payments Dive

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