As people who thrive in the digital world, we own several online accounts built for different purposes. However, threats like synthetic identities can affect our online security, making us vulnerable to identity thieves.
Synthetic ID theft can go undetected for months and years. If you don't know what to look for, you'll leave your information compromised.
For this reason, we reviewed various cybersecurity sources online and gathered the best tips from security experts, people's real-life experiences, and the most important sign you need to watch out for when your data falls victim to synthetic ID theft.
Don’t miss out and leave your information out in the open. Stick with us until the end!
What is synthetic identity theft, and how does it work?
Synthetic identity theft is a type of ID fraud wherein a scammer uses a fake or partially false identity to open accounts, steal money, and commit other crimes.
How does it occur? Hackers can purchase stolen information on the dark web, which they can combine with fake data to create a new identity.
Other thieves use a single synthetic identity to create multiple identities, which they use to build credit.
The keyword to focus on is “build.” Most synthetic identities are built for the long term, as fraudsters often use synthetic IDs to build credit, which can take months and even years.
Building a good credit profile takes a while, but once good enough, they loan, borrow, and purchase as much as possible, and then they disappear.
Scammers can also use synthetic identities to apply for government benefits, open bank accounts, and even healthcare insurance coverage,
Most synthetic fraud cases happen when a hacker uses the following details:
- Name
- Birthdate
- Contact information
- Social Security Numbers
How do hackers get the data?
Unfortunately, hackers can steal data to create synthetic identities using multiple methods, including the following:
- Scammers usually buy and sell stolen Social Security Numbers and other personal information on the dark web.
- Thieves can steal wallets, credit cards, and smartphones, where your personal information is readily available.
- Hackers can also get unauthorized access to your computer using malware or an unsecured WiFi connection. They can seize online transactions and redirect payments or steal information from calls or social media scams.
- Scammers also use social media to lure people into divulging information, which they can do through games or viral challenges.
Hackers can also harvest information for synthetic IDs from leaked databases due to data breaches.
How common is synthetic identity theft?
This type of identity theft comes in many forms. Because of this, it’s challenging to track synthetic identity fraud cases, but it’s currently affecting individuals and businesses across industries like the finance, eCommerce, health, and public sectors.
Unfortunately, synthetic identity comes with long-term impacts we’re yet to experience. The effects of stolen funds, incurred debt from unauthorized purchases, and fake bank accounts affect service providers, consumers, and institutions in unprecedented ways, with losses totaling massive amounts.
According to a report by ABA Banking Journal, synthetic identity theft cases are on the rise. Financial institutions in the US announced a loss of $20 billion in 2020 due to combined crimes of refund frauds, fake loan applications, and even buy-now-pay-later scams.
Who are the usual victims of synthetic identity theft?
Personal information used to create synthetic identities usually come from unsuspecting victims. These can include seniors, incarcerated individuals, children, and even those trying to build or rebuild their credit.
These people’s information is vulnerable to these crimes because they don’t actively access their credit details.
Some individuals might be trying to work toward getting better credit scores, only to fall into scams that end up with their information stolen and used to open fraudulent credit accounts.
Victims may reach out to credit repair companies, for instance, with pretenses of helping them “start over.” In reality, they just gather information to steal, sell, and use for criminal activities.
Synthetic identity fraud typically happens because many companies can’t validate the names and birth dates linked with Social Security Numbers (SSNs).
How do thieves use synthetic identities?
Apart from selling synthetic identities online, thieves can also use them for the following:
| Payment installment schemes |
| These are used to make purchases, usually through credit cards that offer buy-now-pay-later or 0% interest schemes. Using synthetic identities, however, they have no intention of ever paying. |
| Fraudulent utility lines |
| Criminals can apply for housing, utilities, and bank accounts with ease–and with no intent to pay for recurring bills. |
| Credit repair |
| Their accounts may contain negative credit histories, so identity thieves use synthetic ones to create good credit scores. |
| Criminal activities |
| In more severe cases, identity thieves can also use synthetic identities to commit crimes like money laundering, terrorist financing, and human trafficking. |
Is it possible to detect synthetic identity theft?
Yes, but only after fraudsters have already done damage. Synthetic identity theft can be difficult to detect, as financial institutions continue to fall victim to it.
When an identity thief applies for a loan or opens a bank account, it will look like a real customer engagement with the business. Financial companies won’t even know they’re looking at a synthetic identity crime.
Why can it be challenging to detect? Criminals plan for the long term. They establish a good track record to make it seem like they’re a real person with a clean track record worthy of borrowing credit.
IMPORTANT: You can still encounter some indications that you’re a victim of synthetic ID fraud. The most telling sign is receiving calls, emails, and texts containing a name you don’t recognize. You may also receive calls from companies looking for money you didn’t spend.
Synthetic vs. traditional identity theft
Identity theft, in general, pertains to stolen consumer information sold and used without their knowledge and only shows when their credit reports show suspicious activities or their respective financial institution contacts them for questionable purchases and incurred debt.
From there, identity theft fraud victims have the power to freeze their accounts and request investigations. This means you have enough time to act, but when it comes to synthetic identity fraud, it can be challenging.
Unlike traditional identity theft, synthetic ID theft involves using stolen personal information and fake details to create an entirely new identity.
What is the impact of synthetic identity fraud?
Synthetic identity theft is now one of the fastest-growing crimes in America.
Synthetic identity theft fraud doesn't just affect businesses and big names. It also affects regular people like us. To us, one of the most familiar synthetic identity theft examples is Celly, a co-worker who was trying to build her credit in 2017 as a fresh graduate.
With student loan debts under her name, she was determined to build a good credit score to apply for a mortgage eventually.
Unfortunately, she realized that an unknown criminal had stolen her Social Security Number and used it to open new bank accounts and a credit card, which they had abandoned immediately after a huge purchase.
She had to deal with the mess, which included contacting the credit card company, credit reporting agencies, and so on. They ended up freezing her credit, which set her back multiple years.
“I’m recovering today, thankfully,” Celly shares, “It’s difficult getting back up after being weighed down by not only crippling student loans, but other credit debts you’re not even aware of. I had to explain the situation to the credit card company, as the criminal ended up purchasing multiple appliances I couldn’t even afford then.”
When asked about how her Social Security number was stolen, she shares, “My only advice is to be aware of what you put online—especially those enticing contests.”
How to help protect yourself against synthetic identity theft
How do you stop synthetic identity theft? Matthew Aubin, the founder of Counter Surveillance and Cyber Team, shared that to protect yourself from becoming a victim of synthetic identity theft, you must always be careful with your data.
“You should always use caution when sharing personal information on social media, especially when you're not familiar with the person you're talking to. You should also be aware of what information you post and how much access other people have to your account.”
Aubin further shares, “The first is to avoid the use of public Wi-Fi networks. The second is to use strong passwords with a combination of letters, numbers and symbols. The third is to use biometric security features for your devices like fingerprint scanners and facial recognition software.”
Apart from these reminders, it’s also important to keep your Social Security Number safe at all times. Here are some tips we’ve gathered for you:
- You must always keep your Social Security card and other documents containing your SSN safe and secure.
- If you need to discard any documents containing sensitive data, shred or destroy them before throwing them in the trash. These documents include your credit card billing statements, tax records, and bank documents.
- You must remain vigilant about phishing attempts, which can happen via text, email, and call. Callers will usually deceive or threaten you into sharing personal information.
- You may invest in identity theft protection for you and your dependents—especially one that includes fictitious identity monitoring. This is when the service detects fraudulent activities involving your SSN.
- You should also monitor your credit reports as closely as possible. You must report suspicious activities to the three major credit reporting agencies—Equifax, Experian, and TransUnion. You can also monitor via AnnualCreditReport.com.
- You should also examine your Social Security statement. Thieves usually utilize synthetic identities to apply for jobs, using your Social Security Number to back their application. Should their income show up on your statement, contact the Social Security Administration immediately.
How do you report synthetic identity theft? You may do so through the Federal Trade Commission’s IdentityTheft.gov website or by calling the agency at 1-877-438-4338.
Conclusion
As we conduct most of our activities online, it’s important to remain vigilant at all times. Identity theft comes in various forms, so it’s important to be aware of the many scamming techniques thieves use. This includes synthetic identity theft, which continues to wreak havoc across industries.
Don’t let the fear of falling victim to identity fraud stop you, though—we deserve to feel safe online. Remember to keep this guide in mind!
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
