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Synthetic Identity Theft: What Is It?

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You might know what identity theft is. It’s when someone takes someone else’s personal and private information so that they can get something out of it…namely, money. What you might not know is what synthetic identity theft is. The goal is the same, but it’s a little different.

Synthetic Identity Theft

In the case of synthetic identity theft, a person makes up a new and fake identity by mixing up information from a real person with information that they create. You might not immediately see that this is a bad thing, but it can be pretty devastating.

Here are three ways that hackers can create a synthetic identity:

They Can Create a New Credit Profile

By far, the most common way that the bad guys use a synthetic identity is to create a new credit profile. Basically, they use a valid Social Security number, which they take from the victim, and pair it with a made-up name. Then, they start applying for credit with this information. Typically, these applications will get denied, but during this process, a credit profile is created. Even with poor credit, there are companies that give credit to people with bad credit, so the hackers know they can get a few hundred dollars out of this which can turn into a few thousand dollars or more.

They Can Piggyback

Another thing that people do with synthetic identity is a practice known as the piggyback. At a basic level, they look for individuals with great credit, and then they access their account. When they do this, they add a fake person as an authorized user. However, they don’t use this account. Instead, they bide their time and let it sit. While they wait, the major credit card agencies create a report of this synthetic identity, and the criminal hacker can use this new, great credit profile to apply for loans and credit cards.

They Practice Data Furnishing

Finally, they might use data furnishing. This is an effective, sophisticated method, and it requires someone else to help. Basically, the hacker needs access to someone like a manager or a small business owner from an established business. The company is already well-known, and it is approved to offer info on their customers…which they give to the hackers. A setup like this takes several months to set up, but once it is established, it can make the thieves a lot of cash.

Currently, it’s difficult to pinpoint how much financial impact these synthetic identities have, although it is thought that it could be billions of dollars in losses. For someone who gets into the business of identity theft, this could mean billions of dollars. Thankfully, there are a number of things that you can do to protect yourself, including being careful about what type of information you are sharing, especially when it comes to social media. Also, consider a credit freeze and ID theft protection, and make sure that you check your credit report regularly.

Written by Robert Siciliano, CEO of Credit Parent, Head of Training & Security Awareness Expert at Protect Now, #1 Best Selling Amazon author, Media Personality & Architect of CSI Protection Certification.

Synthetic Identity Theft hard to detect

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A criminal can do a lot with “only” your Social Security number, says a report from darkreading.com. Okay, so he doesn’t have the name that goes with the number. Big deal—he’ll just make one up to go with it! This is called synthetic identity theft.

10DAnd this crime has proven worthwhile for the crooks. Nowadays, there’s an increased risk for this crime, says a report by ID Analytics. This is because thieves exploit new SSN randomization practices, says Dr. Stephen Coggeshall, author of the report, and chief analytics and science officer for ID Analytics.

In 2011, the SS Administration began issuing the numbers randomly rather than by pattern to help protect against ID theft. This change has backfired because it trips up anti-fraud technology that’s supposed to spot when a number, that was issued a few years ago, is linked to a phony identity.

The implementation of chip-and-pin cards will fuel the risk and growth of synthetic ID theft. Chip-and-pin point-of-sale transactions will inspire ID theft specialists to figure out new fraud tactics. And they will. They always will. They’re not dumb.

The ID Analytics report says that this crime goes undetected for long stretches because there’s no specific consumer victim. Like, who’s Alekksandreya Puytwashrinjeku? Or, who’s John Smith? Alekksandreya will open up small accounts just to get some credit going under “her” name. The next step is to apply for a big loan—that will never be paid.

The long-term nature of undetection allows the criminal to generate increasingly larger credit limits when compared to the typical ID theft case, says Coggeshall.

As you can see, there’s no actual consumer victim, but instead, the victims are the banks, along with the companies that offer the products that are illegally obtained by the fraudsters. The U.S. government is also a victim. The report explains that over a time period of three years, nearly 1.4 percent of tax returns seemed to be synthetic, costing the government $20 million.

You don’t hear much, if at all, about synthetic ID theft, but the report also points out that a credit card issuer did an analysis and discovered that over a three year period, about two percent of the total application volume consisted of this type of crime.

Still, an identity that incorporates identity theft protection is less likely to be victimized and more secure. And synthetic identity theft can sometimes be detected by a protection service.

Robert Siciliano is an identity theft expert to BestIDTheftCompanys.com discussing  identity theft prevention. For Roberts FREE ebook text- SECURE Your@emailaddress -to 411247. Disclosures.

What is Synthetic Identity Theft?

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Identity theft is first and foremost a problem because we rely on numerical identifiers that attach humans to credit and a variety of services. Once a criminal gets hold of those identifiers, he can simply be you. But when that thief takes on those numerical identifiers and attaches another name or date of birth, he confuses the already broken system further and creates what is called synthetic identity theft.

Synthetic identity theft happens when a person’s identity is partially or entirely fabricated in some way. What defines it as synthetic is when a criminal uses a real Social Security number with another person’s (or fake person, i.e. synthetic) and combines it with a name and date of birth that’s not associated with the number via the credit bureaus or anywhere else. This is a hard type of fraud to discover because the fraud rarely appears on the victim’s credit report or on the perpetrator’s credit report because it’s a fake person. With synthetic identity theft, the criminal often succeeds in creating a new credit file—or, in some cases, a subfile—that may end up on the victim’s credit.

Synthetic identity theft is a problem for victims, of course, but creditors take an even bigger hit. Creditors that grant credit based on fake records and fake people have little recourse. But it also complicates things for individual victims if their names become associated with synthetic identities, like when credit scores are negatively affected because of information in a fraud-based subfile.

Identity theft protection might pick up your SSN with a different name when it’s used for credit. But if it doesn’t catch it, then the restoration component may also help to clean up the mess.

Robert Siciliano is an identity theft expert to BestIDTheftCompanys.com discussing identity theft prevention. For Roberts FREE ebook text- SECURE Your@emailaddress -to 411247. Disclosures.