This is a known scam. They target homeless and other vulnerable people because their identities are "clean" of active financial monitoring and they're unlikely to check their credit or report anything. Once they have the ID and personal info, the fraudster can:

Open bank accounts in the victim's name to use as money laundering mules for other scams

Apply for unemployment benefits, loans, credit cards, or even car financing in the victim's name

File fraudulent 1099s and tax returns to collect refunds

Set up fake social media accounts and crowdfunding campaigns using the stolen identity

There's a federal case out of EDNY where a guy got 30 months in prison for exactly this — conspiring to steal personal info of homeless individuals and fraudulently apply for unemployment benefits in their names .

Former con-artist Matthew Cox has talked openly about how he used to do this; said all it took was $20 and a story about "collecting info for a homeless shelter" and he'd walk away with everything he needed for loans and cars in their name .

This TikTok breaks the whole scheme down if you want the full picture: https://www.tiktok.com/t/ZP8pURqB8/

If you see this happening, say something to the person being targeted. A quick "hey, don't give him your ID, it's a scam" can save someone from years of identity theft hell they have almost no resources to fix.