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Protecting your data is more critical than ever before. Today 1 in 20 people have been a victim of a form of identity theft. Cybercriminals have become more clever than ever and found new ways to steal your identity for financial gain. One of those ways is by committing synthetic identity theft.
Synthetic identity theft is a form of identity theft that involves creating fake identities or using existing, legitimate information to set up new accounts. Criminals then use your personal information to open accounts in your name or create entirely new identities by combining different pieces of data from multiple people. They could also use these fake identities to take out loans or secure credit cards without the knowledge or consent of those affected by their actions.
Synthetic identity theft has become an increasingly popular form of identity theft because it's easy for criminals to do. It can also be done secretly and often goes undetected for months or even years.
This type of identity fraud can affect anyone and every industry. Read on to learn more about this type of identity theft, how it occurs, and how you can prevent it from happening to you.
Identity theft is one of the most common crimes that individuals face today. As recently as 2021, identity fraud cost Americans 5.8 billion dollars in losses.
Synthetic identity theft is one method that has become an increasing issue, given it is much more difficult to detect this type of theft than any other traditional method of identity theft.
This type of fraud is frequently used in conjunction with other forms of identity theft, such as credit card fraud, loan fraud, food stamp fraud, tax fraud, or medical identity theft. Sometimes, people with a poor credit history will use a synthetic identity to apply for a loan or other line of credit.
According to the Federal Trade Commission (FTC), synthetic identity fraud accounts for nearly 80 to 85% of all identity theft cases. While synthetic ID theft has become more common, this form of ID fraud is still more complicated for law enforcement officials to track down the perpetrators. This is because criminals are not always only stealing from one individual's information. Instead, they are stealing information from several people to make up an entirely new persona from scratch by combining it to avoid detection.
Most thieves who perform synthetic ID theft do so by creating an artificial identity to carry out financial crimes. Often these synthetic identities use information from a real person's identity or the identities of multiple people.
This is because criminals need legitimate data such as valid Social Security numbers (SSNs), addresses, phone numbers, and other personally identifiable information (PII) to open up new accounts, receive funds, or make purchases.
Synthetic identity thieves often use the internet, data breaches, or the dark web to access databases containing personal information about consumers. The data they steal to create these identities can come from a living person, a deceased person, a child, or a combination of all these sources. Criminals then take the information they source and create a manipulated or manufactured synthetic identity.
Manipulated synthetic identities are created and based on a person's real identity. Criminals make a new identity using real and fake information from a person, such as their stolen credit card numbers, date of birth, and SSN, to create this new persona.
Often fraudsters will alter some of the information, such as the name or address, to fool banks and keep government institutions from flagging any recent activity on that name or Social Security number as potential fraud.
Manufactured synthetic identities are created from valid data assembled from multiple identities to create a new synthetic identity. Criminals can build an entire fraudulent persona with little more than a Google search, legitimate PII, and basic knowledge about a person.
The more complete the information on a manufactured synthetic identity profile is, the easier it is for thieves to open new accounts. Since many of these manufactured identities are often made up of entirely legitimate information from multiple people, they may pass through security checks without raising any red flags. This is especially common during one-time transactions.
Once criminals have created their false synthetic identities, they use this information to generate realistic-looking documents designed to fool financial or government officials. They will often use the synthetic identity for criminal activities such as fraudulently obtaining financial services, government benefits like Medicaid or food stamps, applying for student loans, or even applying for jobs using one of these made-up personas.
One common use of synthetic fraud is to boost the credit limit on a bank account. This could take years to achieve, but once the limit reaches several thousand dollars, identity thieves will max out the card, or “bust out,” then disappear.
Synthetic identity fraud can be challenging to catch for both consumers and organizations. It can be especially tough to detect when criminals use a manufactured synthetic identity to commit fraud.
However, there are several ways to check for ID theft. Here are five signs that synthetic identity theft may be happening to you:
For example, suppose you receive a statement for an account you do not recognize, and the statement's information slightly differs from yours. This could mean all or a portion of your PII was likely used to create a false identity to steal financial services from banks.
Criminals tend to add victims as authorized users on credit card accounts to boost the credit score of a fake identity with the goal of increasing the likelihood of receiving funding from new credit or loan applications that they submit.
This activity can include a request for significant credit line increases or payment history from an unknown bank account. Thieves will often attempt to use the account or card first to confirm it is still valid, then steal the funds or boost the credit file to conduct more ID theft.
This can include receiving credit card bills that are much higher than normal or getting a notice from a creditor or debt collector for a debt you don’t recognize.
Although synthetic identity theft can be difficult to detect, there are measures you can take to protect yourself from and prevent this type of theft. Below are some of the best safety measures you can take online and offline.
Securing your Social Security card is more important than ever. Once thieves have it, they can use it to open any new accounts or conduct any activity that would require verifying your identity.
It is ideal to keep your Social Security card somewhere secure in your home away from the public eye. Also, it is a best practice not to provide your SSN unless it is necessary to provide it.
If your SSN becomes compromised, you can report a stolen Social Security number to your local police and file a fraud alert with the three credit bureaus, Equifax, Experian, and TransUnion. You can also request a new SSN from the Social Security Administration.
Phishing scams happen when a scammer sends you an email that appears to be from someone or a company you recognize. These emails often contain links to malicious websites or attachments that can give hackers access to your personal data and your computer.
If you receive an email asking for personal information such as a credit card number or Social Security number, ignore it. The best way to avoid phishing attempts is by not clicking on any links in suspicious emails, even if they look legitimate.
Regularly monitoring your bank accounts, credit card, and other financial accounts can help stop synthetic ID theft in its tracks and is a good tactic for fraud prevention overall.
Browse your statements and bills to ensure there isn't any unusual activity on your accounts. If you see a discrepancy, contact your provider or bank as soon as possible to rectify the issue.
Keeping track of the activity, accounts, and information on your credit report can be key to preventing identity theft.
You can get a free yearly credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) from AnnualCreditReport.com. Reviewing the information on these reports can be key to protecting yourself from theft.
If you encounter any suspicious activity or information on your credit profile, you can request to have your file frozen by all three credit bureaus. You can also contact your bank and credit card companies to have your account frozen from any new transactions if you feel you have been a victim of theft.
Many credit card companies also allow you to freeze the card directly through your account access page. This can be especially important if you have an account you have not used in some time. You can also freeze the card while it’s not in use to ensure no suspicious activity occurs until you intend to use the card regularly.
[Callout box] If you suspect someone stole your identity, you should file a police report and also file a report with the Federal Trade Commission (FTC).
Staying safe online is more important than ever and the best way to protect your PII from thieves. Hackers are in the business of stealing your data and tricking unsuspected users into providing their information for them to steal.
Aim for less is more with browsing online more anonymously. Refrain from posting too much identifiable information online and on social media sites.
It is best to use complex passwords that will be hard to crack and not share them with others. You can use password manager software to help you keep your passwords protected and safe from cybercriminals. Also, utilizing two-factor or multi-factor authentication can help keep your data and accounts safe from unauthorized access.
To prevent and minimize the risk of damage from identity theft, you should use a credit monitoring service to alert you if your identity is stolen.
Credit monitoring services monitor all of your accounts and will notify you when they spot any suspicious activity on any of them. You can also install software that monitors all of your accounts for fraudulent activity, including social media accounts. Many software programs today will also scan and remove your information from the dark web if found.
Some of the best identity theft protection software include:
A synthetic profile is often a combination of pieces of data from different individuals that have been combined to create a fictitious person. This false persona can then be used to open new credit accounts or apply for loans that require you to confirm your identity by providing your Social Security number.
A synthetic alert means the information you’ve provided on a financial application doesn't match what’s in your credit report.
When you apply for credit, the bank will often pull your credit report and check its own database for information on you. If the details don’t match, this indicates that someone else has applied for credit using your information.
The Fair Credit Reporting Act (FCRA) requires lenders to notify you if they suspect identity theft or fraud when they see an application with a synthetic alert on it.
According to the FTC, synthetic ID theft now makes up 80 to 85% of all identity theft cases. Additionally, TransUnion released a report stating that this type of theft could grow to $2.42 billion in losses by 2023.
Cybercriminals are constantly finding new ways to steal your information and get away with it. Synthetic identity theft has become one of the most common ways they conduct identity theft. We must become more vigilant in protecting our data than ever before.
If you believe you have been a victim of this type of theft, you are not alone. Reporting it to your financial institutions and the authorities is key to stopping it from causing more damage. Learn more about how you can file a police report for identity theft to prevent it from causing havoc in your life.
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