Understanding & Preventing Synthetic Identity Theft

Technology advancements have given scammers a new way to carry out identity theft that can affect a wide range of individuals. Learn more about synthetic identity theft.

We’ve all heard of traditional identity theft. When this happens, somebody gets your Social Security Number, your name, and other personal information to set up credit cards in your name. The new crime on the rise, however, is called synthetic identity theft, where fraudsters create a whole new identity using pieces of information from different people.

Learn how synthetic identity theft happens and how to prevent it from happening to you or those most vulnerable to this fraud.

Need-To-Know Basics

What’s Synthetic Identity Theft?

Synthetic identity theft is a form of fraud where a fake identity is created using real and fake information. This form of identity theft differs from standard identity theft since the fraudster mixes stolen information like social security numbers, fake names, birthdates, and addresses to create a new identity. They will then use this identity to open bank accounts, apply for loans, and commit other types of fraud.

How Synthetic Identity Theft Works

Typically, the fraudster first finds a Social Security number that hasn’t been used and creates a fictional name and birth date, then enters an address that they have access to.

Next, they apply for a credit card using the new identity. The application will be turned down, but this creates a profile for the fraudster to continue using.

They then find an accomplice with established credit and add the fake identity to that account as an authorized user. Once the credit history builds, they’ll have a profile created, and it’ll be easier for them to get a card on their own.

The fraudster may also make small purchases and payments with this synthetic identity, mimicking responsible financial behavior to make the identity seem legitimate.

Fraudsters often use PO boxes, empty homes, or rented mailboxes to receive mail and prevent people from discovering their fraud.

Eventually, they’ll max out the credit limit on their new cards, not pay anything, and get rid of the fake identity.

Vulnerable Groups

Fraudsters typically target children who don’t have established credit, specifically children born after 2011. A report by Carnegie Mellon University’s CyLab said that the rate of children’s identity theft was more than 50 times that of adults.

Older adults are also more likely to be targeted since many seniors have a long credit history but may not actively monitor their credit or apply for new credit. Fraudsters may use nursing home records or Medicare scams to get their personal information.

In addition, military members are more likely to be victims of synthetic identity theft. Active-duty military personnel may be deployed for long periods and not check their credit regularly. Scammers use their absence to apply for credit or benefits using stolen details.

Even if you’re not in the most affected groups, staying informed can help you protect vulnerable individuals by emphasizing online safety and preventing identity theft. According to the Global Compliance Institute, the average loss per confirmed synthetic fraud case is $15,000 in the US.

How Can I Protect Myself & My Family?

A federal law enacted in September 2018 allows you to place a free credit freeze on your account for a year, including children under the age of 16. This will prevent scammers from opening accounts in your name. Victims of identity theft can freeze their credit for up to seven years.

Take extra precautions to protect your children’s Social Security Number on forms and documents. If you’re giving it to a company or something like a doctor’s office, ask why they need it and how it will be protected before writing or typing it in.

Regularly checking your credit reports for suspicious activity can be incredibly helpful in spotting signs of fraudulent activity.

Steps To Take If You Suspect Synthetic Identity Theft

If you have been a victim of synthetic identity theft. In that case, it’s important to file a report with the FTC, which will provide a personalized recovery plan and a report you can use when disputing fraud with creditors and banks.

In addition, notify the IRS if you suspect someone is using your social security number for fraud.

Summary

Fraudsters are cleverer than we often think. Synthetic identity theft is a growing crime where criminals create a new identity using a mix of real and fake personal information. Unlike traditional identity theft, where a fraudster impersonates a single person, synthetic identity theft blends stolen Social Security numbers, names, birthdates, and addresses to establish fraudulent credit histories, open accounts, and secure loans.

A+FCU Can Help You Spot & Recover From Synthetic Identity Theft

A+FCU is committed to protecting members against synthetic identity theft and other fraudulent activities. With our safety and security resources, A+FCU offers guidance on recognizing scams and deterring fraudsters. Members can access tips on fraud protection, identity theft prevention, and online safety measures. Additionally, members can use our fraud text alert service, which notifies members of potential fraudulent activity on their debit cards. Members can help protect their personal and financial information using these resources.