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Fraudulent attempts and scams to steal non-public personal information are consistently on the rise, and with an increasingly digital world, they can be more and more challenging to recognize. Scammers are becoming trickier, attempting to seamlessly integrate scams into our day-to-day lives. This means the risk of exposing personal financial information—even unintentionally—grows daily.
An increase in scams also means an increase in the type of fraudulent attacks used by scammers. Recently, synthetic identity fraud has begun posing a serious threat, specifically to the financial industry.
What Is Synthetic Identity Fraud?
According to Equifax, “synthetic identity fraud is a form of financial fraud in which a real person’s information, such as their social security number or date of birth, is stolen and combined with other falsified personal information to create a new identity.” Typically, the SSN is stolen—either by the fraudster stealing it themselves or purchasing a stolen SSN from the dark web—and then a name, date of birth, mailing address, email account, and phone number are made up and associated with the legitimate SSN, creating a new identity. This process is known as identity compilation, but identity manipulation is when a fraudster also steals the victim’s actual personally identifiable information and alters it slightly to try and “become” a new person. A false identity can also be created through identity fabrication, where the fraudster completely falsifies all identity information. Creating a fake identity can be lengthy, sometimes taking years to build a complete, believable credit history.
Who Do Fraudsters Generally Target?
Synthetic identity fraud activity can be far more challenging to identify, as traditional fraud monitoring processes may not detect it. Even financial institutions and lenders have trouble detecting these scammers because of the solid credit report they present. Most commonly, scammers who utilize this method of fraud will target children, the elderly, and/the homeless population, as they are the least likely to use or monitor their credit and credit history.
What is the Goal of Synthetic Identity Fraud?
More often than not, this type of fraud is associated with financial fraud. With these newly created identities, the scammer can apply for and obtain loans, bank accounts, credit cards, and more. They could also file tax returns, receive medical care, and apply for unemployment benefits.
Fraudsters may seek this method out as a way to obtain false accounts to store illegally obtained funds in, to evade persecution and hide from authorities, and even to receive loans/walk away with money.
What Happens if You’re the Victim of Synthetic Identity Fraud?
If the scammer uses your Social Security Number, it can lead to a split or fragmented credit file, meaning another person’s information is linked to your credit history. This can be harmful to your credit if the other person defaults on loans, makes late payments, and takes other negative, careless actions because it will lead to a (sometimes very significant) drop in your credit score. It can be an extensive, time-consuming process, but it is important to sort through and separate legitimate and illegitimate information on your credit history to determine where the false information is coming from.
Protect Yourself from Synthetic Identity Fraud
One of the best ways to stay on top of synthetic identity fraud attempts is to monitor your credit report consistently. If you notice suspicious activity, report it to any of the three main credit bureaus (Equifax, TransUnion, or Experian) or on the Federal Trade Commission’s website.
It is crucial to be careful with your personal information. Keep your SSN card at home and safely stored away, along with any other documents that have personal information, such as tax/bank statements. Shred or black those documents out when disposing of them. Understand the signs of phishing and be extra cautious with emails, texts, and phone calls from unknown and unsolicited sources, especially if they begin asking for your information under the guise of something else.
Ultimately, you should continue closely monitoring your credit report, as you are more vulnerable to other fraud attempts now. You have no way of knowing what the fraudster did with your personal information and/or who they sold it to, so there may be others out there who try using your information for their own benefit, damaging your credit in the process. You can never be too careful when it comes to your personal information.
