What Is Synthetic Identity Theft?
Synthetic identity theft occurs when a criminal creates an identity instead of stealing an existing one. The scam involves mixing real Social Security numbers or numbers not in use with other pieces of information—names, addresses, and birthdates—to put together an entirely new identity. In contrast, the more familiar form of identity theft involves using the actual name, Social Security number and other personal data of a single victim.
Synthetic identity theft is significant
You may not have even heard of synthetic identity theft but, by some reports, it accounts for 85 percent of all identity theft in the U.S—costing an estimated $2 billion a year. How can it be so big? In part, because it can be difficult to detect, according to the Identity Theft Resource Center. In reviewing credit card applications, credit bureaus regularly deal with all sorts of information that doesn’t quite align with the information on file. This can be a result of typographical errors, names changes, and other issues. Identity thieves exploit this weakness.
According to Bloomberg News, synthetic identity thieves value the Social Security numbers of people who don’t use credit, including children. When using a synthetic identity to apply for credit cards, the thief is often turned down at first, because there’s no credit file associated with the identity. The inquiry generates a file with a credit bureau, and thieves keep applying until a lender finally opens an account.
Who's the victim of synthetic identity theft?
Here’s where the crime gets even more interesting. Since synthetic identity theft has no specific consumer victim, it can continue undetected for a while. During that time, the thief will make regular payments, building up a larger and larger credit limit before “busting out.” That’s the term for suddenly using the remainder of the credit limit. That leaves the lender holding the bag and, it stands to reason, the rest of us possibly subsidizing the thief’s fraudulent gain through higher credit card fees.
A synthetic identity can also be used to apply for a job or other purposes. And if the identity thief uses your real Social Security number to create the fictitious identity, the crime could come back to haunt you. Yes, the rest of the information may not be yours, but that is your Social Security number, after all.
How to help protect yourself from synthetic identity theft
Is there anything you can do to help protect yourself? Well, you don’t want your Social Security number falling into the hands of a synthetic identity thief.
- Keep your Social Security card and any documents that contain the number safe and secure. And before discarding any documents containing personal information, be sure to shred them. The same goes for bank and credit card statements.
- Beware of phishing attempts—by phone, email or text—to trick you into sharing your Social Security number and other personal information.
Given the number of data breaches that have exposed the Social Security numbers of tens of millions of U.S. consumers, your number may already be out there. So, keep an eye out for activity that may indicate a synthetic identity thief is using it:
- Monitor your credit reports for activity that’s not yours. You can do this at AnnualCreditReport.com, where you’re allowed to access one free credit report each year from each of the three major credit reporting agencies. By accessing a different report every four months, you can track your activity at no charge at different points over the course of a year. Given the value placed on minors’ Social Security numbers, check your children’s credit reports, as well. If you see unfamiliar activity, contact the credit agency. You may find our article on disputing a credit report helpful.
- Review your annual Social Security statement. Since a fraudster might use a synthetic identity to obtain employment, it’s possible his income could show up on your statement. You want to make sure the amount on your statement aligns with what you know your income to be. If it doesn’t, contact the Social Security Administration.
- Watch your mail. Be on the lookout for mail sent to your address but in someone else’s name. This can be a sign that creditors are trying to reach the thief—and your home address is mingled with the other information the synthetic identity thief has cobbled together.
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