What is Synthetic Identity Theft and How Can You Spot it?

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Mona Terry
VP of Operations, Identity Theft Resource Center

When it comes to identity crimes, synthetic identity theft is a serious issue not only because it’s growing, but also because it’s a complicated threat that is sometimes hard to spot and correct.

In 2016, synthetic identity theft cost credit providers more than $6 billion, which accounts for up to 20% of credit losses, according to financial services consulting company Auriemma Consulting Group. Additionally, Experian research indicates that the average loss per account for synthetic identity theft is $6,000 and that overall synthetic fraud grew 35% from 2015 to 2016*.

Synthetic identity theft is when a criminal combines different pieces of information — from both real and fake data — to create a fraudulent identity to do things like obtain a loan or open a credit card. For example, thieves may piece together a phony name with a real Social Security number (SSN) and address they collected. Unfortunately, anyone with a SSN is at risk of this crime, which includes children. Synthetic identity theft creates a new “person” and credit file, so there may be many victims impacted by one synthetic identity.

Synthetic identity theft happens when thieves acquire data or information via a breach, hack or bought on the dark web. This year alone (as of August 18, 2018), there have already been 790 data breaches with more than 27 million records exposed, so there’s unfortunately no shortage of personal information up for grabs by fraudsters.

Eva Velasquez, President and CEO of Identity Theft Resource Center (ITRC), explains, “Synthetic identity theft can include individual attempts as well as large fraud rings. Particularly when thieves use online platforms to commit this crime, they can affect tens of thousands if not hundreds of thousands of people.” Velasquez adds, “Although an individual cannot completely prevent this from happening to them, we suggest they regularly monitor their accounts to look for any new inquiries or unfamiliar transactions as a thief may be using any number of personally identifiable information — Social Security number, driver’s license or state ID card, email or financial account information.”

To be on the lookout for synthetic identity theft, practitioners should be aware of some key signs:

  • A SSN issued after 2011 may be a red flag. In 2011, the Social Security Administration switched systems and began to randomly assign SSNs rather than have pieces of it attached to specific data points like the state or year in which someone was born. Also, if you see SSNs that are “young,” it could be a red flag that something is off, as children aren’t usually applying for new accounts.

  • A lack of any information may be another indicator. If you’re searching the individual’s history and you come up with no results for driver’s licenses, automobile ownership, insurance, property ownership, job designations or school history, there may be something fraudulent happening with that persona. Even though some individuals may have thin credit files with relatively light credit histories, there should still be other accounts or proof that an individual actually exists. If there’s a limited history, address, phone numbers and the identity seems to appear from nowhere that could signal a synthetic identity.

  • A credit file with a rapid rise in the FICO® Score

  • A credit profile that shows several trades where the individual is an “authorized user” to boost the FICO® Score

  • A credit report with a file date (the date the identity first appeared in the credit file) that is out of sync with the identity

  • A lack of use of credit card for several years followed by a request for large credit line increases or rapid use and payment from an unknown bank account

  • An address change immediately after an account is opened

By keeping an eye out for signs of synthetic identity theft, professionals have a better chance of catching it early on and potentially saving their organization thousands of dollars as well as time spent reconciling issues caused by it.

*Experian proudly provides financial support to the Identity Theft Resource Center.