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Synthetic identity theft is a form of fraud that combines real and fake identifying information to create a "new," false identity. For example, synthetic identities can be made by combining a stolen Social Security number (SSN) with a fictitious name, birthday and address.
Synthetic identity fraud is a rapidly accelerating threat, and its victims can experience serious credit and financial fallout. Once fabricated, criminals use the fake identity to commit financial fraud, credit fraud and government benefit fraud.
These synthetic identities can be notoriously difficult to detect: Fraudsters sometimes incubate synthetic identities for months or even years before using them to borrow large amounts of money or take other actions. Once that's done, they'll often abandon the identity and create another one using the same methods.
To avoid becoming a victim of synthetic identity fraud, it's important to keep your sensitive information out of the hands of identity thieves. Here's what you need to know about how synthetic identity theft happens and how to avoid it.
What Is Synthetic ID Theft?
Synthetic identity theft is when a fraudster creates a false identity by combining real and fake identifying information. For example, a synthetic identity may be created by stealing a real SSN and combining it with a false name, date of birth and address. This new, fake identity is then used to commit acts of fraud.
Synthetic identity theft differs from the types of identity theft where a fraudster poses as someone else and uses their personally identifying information (PII) to commit crimes such as financial or credit fraud. The key difference is that, in the case of synthetic ID theft, the fraudster creates an identity using PII from various sources to carry out crimes.
Types of Synthetic ID Theft
Synthetic identities can generally fall into one of these categories:
- Identity compilation: Sometimes called "Frankenstein fraud," this is a form of identity theft in which a fraudster uses real information (often a real SSN) alongside fake information to fabricate a false identity they can use.
- Identity manipulation: This is a form of synthetic ID fraud in which the details of a true identity are altered to create a false one. An example of identity manipulation to create a synthetic ID could be if someone with bad credit alters their name on applications to hide their previous credit history. This form of fraud tends to be easier to detect than identity compilation.
How Does Synthetic Identity Fraud Happen?
Synthetic identity theft typically happens when a fraudster gets their hands on a real victim's Social Security number and then combines it with other real or false identifying information to fabricate a new, false identity.
After creating a synthetic identity, criminals may spend a period of several months or even years cultivating the identity to appear legitimate, including by building up a credit history. Once they've gained access to a large line of credit, they "bust out"—in other words, they borrow a lot of money and then disappear.
It can be difficult for authorities to detect these false identities before they default on their bills because, up until disappearing, they may appear to be legitimate borrowers.
What Happens if You're the Victim of Synthetic ID Theft?
The impact of synthetic identity theft depends on the crimes that a victim's PII was used for, because the crimes carried out with synthetic IDs are varied.
When a real SSN is used by a fraudster to create a fake identity, the victim could have their credit damaged or have delinquent balances tied to their credit profile as a result. Or, victims whose SSNs are used to collect government benefits may find out their information was used when they're later denied their own rightful benefits.
One reason that synthetic ID theft can be difficult to catch is that fraudsters may target individuals who don't use credit as often, such as children or the elderly. This allows criminals to fly under the radar, as their victims may not discover the activity tied to their credit profile for an extended period of time.
For example, children whose SSNs are used may not find out their information was stolen to commit credit fraud until they reach adulthood. By that point, the fraudulent activity tied to their SSN can be a barrier to employment or accessing credit.
What to Do if You're the Victim of Synthetic ID Theft
If you realize that your information is being used in a fake identity or find out an unrecognized account is tied to your SSN, there are steps you can take.
- Report it to the Federal Trade Commission (FTC). You can report identity theft, including a stolen SSN, to the FTC by visiting IdentityTheft.gov and following the prompts. You can also call 877-438-4338 to report it.
- Contact the credit bureaus. You'll want to notify the three major credit bureaus (Experian, TransUnion and Equifax) that you may have unauthorized accounts. You also have the right to place a fraud alert on your Experian credit report through the fraud alert center or by calling 888-397-3742. Experian will notify the other two bureaus of your fraud alert.
- Notify financial institutions. Contact any financial institutions where the fraud occurred, such as your bank, credit card issuer and insurance companies.
How to Avoid Synthetic ID Theft
The key to avoiding synthetic identity theft is to keep your PII safe and monitor for any signs that your information has been compromised. Here are some practical identity theft prevention tips you can implement.
- Keep your SSN private. Safeguard your SSN to avoid supplying an identity thief with the key to stealing your identity or fabricating a false one. When a business asks to verify your identity with your SSN, ask if an alternative form of identification would suffice.
- Avoid sharing personal information online. Putting your full date of birth, maiden name or an old address on social media may seem innocent enough, but pause before you post. These are all details that can be used to pose as you or combined to create a false identity. When in doubt, don't post it.
- Beware phishing attempts. Fraudsters use a number of phishing tactics to try to get their hands on your PII or financial information. For example, a scammer could pretend to be from the Social Security administration and urge you to hand over your SSN to avoid losing your benefits. In reality, this is a ploy to steal your sensitive information. Never hand out your SSN to anyone who calls asking for it.
- Lock your credit reports. Locking your credit file can make it more difficult for fraudsters to open up new credit in your name. When you need to apply for credit, you can temporarily unlock your credit report to complete your application.
The Bottom Line
Synthetic identity theft is a crime that can go undetected for an extended period of time, particularly when its targets aren't actively accessing their credit. Your best line of defense against identity theft is always prevention; be very careful about sharing PII, and be skeptical of anyone who asks you to share your information.
Beyond preventive measures, you can monitor your credit for signs of fraud. Sign up for free credit monitoring to stay alerted to changes to your credit file. This can help you spot signs of suspicious activity. If you find inaccurate information on your credit report, you have the right to dispute it.
Also, consider running a one-time free dark web scan from Experian to check if your information appears on the dark web. If you find that sensitive information has been compromised, locking your credit may be a prudent next step.