The US Department of Justice has charged five individuals in the first major federal crackdown on 'ghost students'—fraudsters who use AI to steal identities and apply for student loans. The scheme involves purchasing personally identifiable information (PII) of Americans, particularly high school graduates who never attended college, and using it to fill out FAFSA applications. AI is used to simulate class attendance and coursework to keep the fraud going.
The DOJ seized over $750,000 in cryptocurrency from a network linked to Kenyan nationals. Officials estimate over 830,000 potentially fraudulent accounts, with losses nearing $130 million. Victims are left with damaged credit and loan repayment demands.
The FBI and Department of Education collaborated to trace funds across US and foreign bank accounts and crypto wallets. One defendant received over $1.4 million in fraudulent refunds.
Source: Ars Technica · Summarized by HeadlinesBriefing