Synthetic Identity Theft: The New Threat

Probably the most prolific type of fraud perpetrated in the 21st century is identity theft. With the statistics on this fraudulent activity increasing exponentially the last few years, people have become aware and many have implemented the safety precautions needed to avoid being a victim. Nevertheless, criminals have likewise adapted and found other ways of committing the crime. The newest trend in the stealing of identity is now called synthetic identity theft.

As opposed to “true-name identity fraud,” synthetic identity fraud happens when the thief uses a real social security number and combines it with a name and birth date other than the ones associated with the number. The thief will use bits and pieces of information from a number of people and combine them to create a new identity. This type of fraud is more difficult to track as it doesn’t directly show up on the victim’s credit report. Rather, it will show up as a new file in the credit bureau or as a subfield on one of the victim’s credit reports. With your social security number, these swindlers can open new bank accounts, get credit cards, or apply for loans. Though much of the impact of synthetic identity fraud is on creditors, it can also harm consumers.

Indirectly, consumers partially pay for synthetic identity theft as creditors try to pass off these losses as part of costs to consumers. These can either be through higher fees or higher interest rates. However, the real damage on a consumer can happen if their social security number enters the database that flag criminals. Proving your innocence can be difficult since they can assume that you have an alias. And in terms of employment, a potential employer will more likely reject your application to avoid the risk of hiring a possible criminal. There is also the risk that creditors who have been duped can run after the real owner of the social security number. If the fraudulent identity enters the system as a subfield under your credit report, it may surface when a creditor requests for all files associated with the number.

Though it may take years to detect this type of fraud, there may be ways for consumers to protect themselves or detect the theft before it gets worse. Some believe it will be difficult to discover through credit reports. Nonetheless, it would be good to order your credit report on a regular basis. Check the reports diligently and make sure there are no erroneous data or accounts that don’t belong. Another way to detect it is by monitoring suspicious mails that issue notices for change-of-addresses or credit offers with your name misspelled. Whenever you receive a denial for a credit application, scrutinize the reason and ensure that the decision was based on your correct identity. Finally, make sure you order your Social Security Statement. Check your earnings and make sure you recognize all of them in case your number was used by a thief to obtain employment.

Taking these measures may be tedious and taxing, but we do know that it’s better to be safe than sorry.