What is synthetic identity theft? Avoid becoming a victim

What is synthetic identity theft?

How do scammers create a synthetic identity?

While fraud patterns can change over time, scammers usually follow these steps to create a synthetic identity:

• Obtain a personal identification number. In the United States, criminals often go after Social Security numbers (SSNs). Criminals usually snatch SSNs they find circulating out in the open, but they can also buy stolen numbers on the dark web. In other countries, this step might include acquiring social insurance numbers, national insurance numbers, or other local alternatives.
• Gather the victim’s personal information. To make the fraud more convincing, scammers usually combine real personal identifiable information with fake data to create a synthetic identity. This information often comes from data breaches and includes real names, addresses, and phone numbers.
• Create supporting documents. Scammers create fake IDs, birth certificates, and other documents to make the fraud more believable. They use these documents for identity verification or to apply for credit.

How does synthetic identity theft work?

Synthetic identity theft exploits various loopholes in financial systems. After creating a synthetic identity, scammers use it to open a bank account and build a legitimate-looking financial history. Initially, fraudsters use their new accounts responsibly, making timely payments or taking small loans. Later, fraudsters apply for bigger loans or higher-limit credit cards. With a credible financial history, banks may not see any red flags and grant scammers access to more money.

The final step involves a “bust-out” scheme, in which scammers max out credit limits or withdraw all funds and disappear. Successful synthetic identity theft can cause significant financial loss to banks and other financial institutions. What’s worse, these scams may go on for years before they’re detected.

Common uses for synthetic identities

Scammers use synthetic identities for various reasons:

• To fake credit histories and open bank accounts.
• To artificially inflate their credit limit.
• To illegally obtain work permits in foreign countries.
• To claim benefits they’re not entitled to.

Who are the main targets of synthetic identity theft?

While no one is immune to synthetic identity theft, the main target groups are:

• Minors. Synthetic identity theft can ruin a child’s credit score before they’re old enough to make purchases. Criminals target minors because there’s less chance of rejection due to pre-existing credit scores. Child identity theft often goes unnoticed for years, making children good targets.
• Seniors. Cybercriminals target seniors, hoping they’ll be easier to scam and more willing to give out personal information. Also, seniors might be less active in monitoring their accounts or credit.
• Deceased people.Scammers steal personal information from obituaries or death notices. Deceased individuals are targeted because financial institutions don’t monitor their data, allowing scammers to commit fraud undetected.
• Financial institutions. Banks and other financial institutions are major targets for synthetic identity theft. Cybercriminals exploit weaknesses in identity verification systems to obtain loans or credit cards under fake names.

What to do if you’re a victim of synthetic identity theft

If you’ve fallen victim to synthetic identity theft, here’s what to do:

1. Inform the Federal Trade Commission (FTC) or a similar authority. In the United States, report the fraud to the FTC at IdentityTheft.gov or call 877-438-4338.
2. Contact your local police department. File a police report and provide as much information as possible about the fraud, including any evidence of the scammer’s real identity.
3. Contact financial institutions. Notify your bank, credit card issuers, and any other financial institution where the fraudulent activity has occurred. Your bank may suggest closing the compromised account.
4. Dispute fraudulent transactions. Work with your financial institutions to reverse the fraudulent transactions and report any additional suspicious activity immediately.

How to prevent synthetic identity theft

To avoid synthetic identity theft, follow these steps:

• Secure your data. Do not enter your data on suspicious sites. Minimize online exposure of your personal data whenever possible. Vigilance is often the best protection against identity theft.
• Stay alert for phishing attacks. If you receive suspicious emails containing links, be careful. If you suspect the message is from an impostor, ignore the email or verify its authenticity with the actual person or organization they’re claiming to represent.
• Act quickly. Contact your bank and other institutions immediately if you suspect something has happened to your account or identity verification number.
• Monitor your credit score. Use credit monitoring services to track factors influencing your score over time and spot any unusual cards linked to your identity.
• Avoid sharing your identification number. Be very careful about sharing your SSN or other identification number.Only do so if you’re certain you can share the details securely and are dealing with a trusted organization. Identification numbers are linked to you permanently — and they will be used to assess your loan options.
• Avoid sharing personal information with strangers. If a stranger asks for personal information, they likely have malicious intentions. Whether it’s your mother’s maiden name or home address, be careful who you share that information with.
• Use strong passwords for your accounts. Whether it’s for your bank account or social media profiles, create strong passwords that are hard to crack. Follow our tips on creating strong passwords, such as including a mix of different characters (letters, numbers, and symbols).
• Use a VPN. A VPN encrypts your traffic and masks your IP address, lowering the risk of getting hacked. You can install the NordVPN app on your smartphone, computer, tablet, or router to prevent wrongdoers from spying on your online activities. With one NordVPN account, you can protect up to ten devices and significantly improve your digital security. It’s better to be proactive than to deal with the consequences later.