As an energy and utilities professional, we are observing the evolving threat landscape, I believe identity fraud in our sector is becoming a silent but growing crisis. Unlike financial institutions, utility companies are not legally obligated to report fraud incidents. This regulatory gap leaves much of the damage unrecorded and invisible. Customers rarely file complaints, often out of frustration or apathy, and in many cases—especially involving synthetic identities—no real victim exists to sound the alarm. As a result, the financial and operational losses are absorbed by utilities, creating a dangerous cycle of underreporting and under-response.
The low-friction onboarding process that utilities have traditionally maintained—meant to ensure quick access for essential services—has inadvertently opened the door to misuse. Unlike the banking sector, where “Know Your Customer” (KYC) requirements are stringent and standardized, utilities operate with minimal verification protocols. This makes it alarmingly easy for criminals to open accounts using stolen or synthetic identities. Detection often comes only after billing cycles—typically 30 to 60 days—giving criminals ample time to exploit the system before irregularities are noticed.
Fraudsters capitalize on both the essential nature of electricity and the protections afforded to vulnerable consumers. In cases where accounts are flagged as linked to critical medical needs, utilities have extremely limited authority to suspend service, even if fraud is suspected. This loophole provides an unintentional layer of protection for criminals using such identities. Additionally, law enforcement seldom prioritizes unpaid utility bills, and utilities are not mandated to file suspicious activity reports, creating a low-risk, high-reward environment for fraudulent activity.
Fraudsters employ a variety of tactics:
Using basic personal data—such as a name, address, and SSN—to open new accounts and disappear after consuming services.
Creating “synthetic” identities by combining real and fabricated details, gaining initial trust by making small, timely payments before defaulting.
Leveraging stolen credits or financial accounts to build credibility and launder funds through utility portals.
Using fraudulent or stolen utility bills as proof of residence to access loans, housing, or fintech services, with such documents even appearing in underground markets to verify fake identities.
This problem extends beyond unpaid bills. Every fraudulent utility account becomes a launchpad for broader cybercrime—fuelling synthetic identity operations, financial fraud, and even government program abuse. The utilities sector, though not as tightly regulated as banking, plays a crucial role in the broader financial and identity ecosystem. Ignoring fraud within this space could ripple outward, destabilizing trust across multiple industries.
To mitigate these growing risks, utilities must adopt a proactive, intelligence-driven approach:
Strengthen onboarding using biometric verification, phone/email risk scoring, and behavioral analytics.
Deploy advanced anomaly detection to identify synthetic identities and “bust-out” patterns early.
Collaborate across the sector—sharing data, threat intelligence, and fraudulent pattern indicators to form a unified defence network.
Utilities have long been viewed as stable infrastructure providers, not high-risk financial entities. That perception must change. As fraudsters increasingly exploit this low-regulation environment, utilities are being drawn into the frontlines of financial crime ecosystems. The sector must evolve—embracing tighter verification, smarter monitoring, and robust data sharing—to protect both operations and the millions of consumers who rely on essential services.