Understanding and Preventing Synthetic Identity Theft

Synthetic identity theft is a growing concern in today’s digital age. This form of fraud involves combining real and fake identifying information to create a new, false identity. For instance, a synthetic identity can be crafted by merging a stolen Social Security number (SSN) with a fictitious name, birthdate, and address. This new identity is then used to commit various types of fraud, including financial, credit, and government benefit fraud.

How Synthetic Identity Fraud Occurs

Fraudsters typically obtain a real SSN and combine it with other real or false identifying information to fabricate a new identity. These synthetic identities can be difficult to detect because criminals often incubate them for months or even years before using them to borrow large sums of money or commit other fraudulent activities. Once they have exploited the identity, they abandon it and create another one using the same methods.

Types of Synthetic Identity Theft

Synthetic identities generally fall into two categories:

Identity Compilation

Also known as “Frankenstein fraud,” this form of identity theft involves using real information (often a real SSN) alongside fake information to create a false identity. This fabricated identity is then used to commit fraud.

Identity Manipulation

This type of synthetic ID fraud involves altering the details of a true identity to create a false one. For example, someone with bad credit might alter their name on applications to hide their previous credit history. This form of fraud is usually easier to detect than identity compilation.

Impact of Synthetic Identity Theft

The consequences of synthetic identity theft can be severe, depending on the crimes committed using the victim’s PII. Victims may experience damaged credit or delinquent balances tied to their credit profile. In some cases, victims may be denied government benefits because their SSN was used fraudulently to collect benefits.

Synthetic ID theft can be particularly challenging to detect because fraudsters often target individuals who don’t use credit frequently, such as children or the elderly. This allows criminals to operate under the radar, as their victims may not discover the fraudulent activity tied to their credit profile for an extended period.

Steps to Take if You’re a Victim of Synthetic ID Theft

If you discover that your information is being used in a fake identity or find an unrecognized account tied to your SSN, take the following steps:

Report 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

Notify the three major credit bureaus (Experian, TransUnion, and Equifax) about any 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.

Preventing Synthetic Identity 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:

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

Be cautious about sharing your full date of birth, maiden name, or an old address on social media. These details can be used to pose as you or combined to create a false identity. When in doubt, don’t post it.

Beware of Phishing Attempts

Fraudsters use various phishing tactics to try to obtain your PII or financial information. For example, a scammer might pretend to be from the Social Security Administration and urge you to hand over your SSN to avoid losing your benefits. 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 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, 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 in 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.

At O1ne Mortgage, we understand the importance of protecting your identity and financial well-being. If you have any mortgage service needs or questions, don’t hesitate to call us at 213-732-3074. Our team of experts is here to help you navigate the complexities of the mortgage process and ensure your financial security.