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What is synthetic identity theft?

Synthetic identity theft can have catastrophic and irreversible results. Imagine trying to get a mortgage for your dream apartment, only to find out that your credit score has mysteriously dropped, and you’re now considered to be financially unreliable. You might then discover that multiple new bank accounts and credit cards have been opened in your name, and that you're the victim of synthetic identity theft. So what is synthetic identity theft? And how can you protect yourself?

Paul Black

Paul Black

Mar 17, 2021 · 3 min read

What is synthetic identity theft?

What is synthetic identity theft?

Synthetic identity theft is when someone creates fake identities, either by combining stolen and fabricated information or by creating fake personas from scratch. For example, thieves can use a fake name and address, along with a real social security number, to create a synthetic identity.

There are a number of ways in which scammers can use such synthetic identities:

  • To fake their credit histories and open a bank account.
  • To artificially inflate their credit limit.
  • To illegally obtain a working permit in a foreign country.
  • To claim benefits they're not entitled to.

How does synthetic identity theft work?

Scammers usually combine real and fake data to create a synthetic identity. They try to find people with no credit history, so they often exploit the social security numbers of children and minors. By doing this, they have less chance that an institution will reject their application due to pre-existing credit scores. Criminals usually just snatch these numbers if they spot them circulating in the open, but they can also buy stolen numbers on the dark web.

They also target minors because they are less likely to use the number anytime soon, so it will take longer for the ruse to be discovered. However, if you had your details stolen as a child, you’ll find out when you grow up and try to open a bank account or apply for financing on a car or house.

Social security numbers have also become randomized since 2011, so they contain no birthdate or geographical data. That makes them even easier to use for synthetic identity creation. There have even been cases when scammers used randomly generated non-existing numbers to open bank accounts.

Why create a synthetic identity?

After stealing or inventing the social security number, a criminal’s first goal is to get as high a credit score as possible. They can pair the number with other identifiable data to create a fake identity, and can then link this persona to an existing bank account. If they can get themselves registered as the authorized user of a pre-existing credit card, that can also boost their credit score.

As the score rises, the scammer becomes qualified for ever greater levels of credit. They open new accounts and get new cards, simultaneously improving their score and getting access to larger amounts of money. Finally, they cash out without repaying their credit and vanish.

When the bank or credit card company comes looking for their money, they’ll either find no one at all, or the trail that leads to the original innocent owner of the social security number.

How to prevent synthetic identity fraud

Synthetic identity fraud has a high success rate, and it isn't easy to prevent. This is partly due to the outdated verification methods used by institutions like banks. Some of these organizations still rely on paper utility bills and other easily falsified documents.

It is quite challenging to detect synthetic identity theft cases in the early stages of the scam. However, as scammers seem to have certain behaviorial patterns, organizations pay more attention to studying their customers' banking habits to identify such suspicious schemes before it's too late.

For individual users, we recommend the following actions to prevent synthetic identity frauds:

  • Secure your data. Do not input your data on suspicious sites. Also try to minimize the online exposure of your personal data whenever possible. Sometimes the best identity theft protection is personal vigilance.
  • Stay alert for phishing attacks. If you receive unexpected or suspicious emails containing links, be careful. If you have a suspicion that you're receiving communications from an impostor, ignore them or double check their authenticity with the real person or organization they're claiming to be.
  • Act quickly. Immediately contact your bank and other relevant institutions if you have even the slightest suspicion and ask whether they noticed something suspicious happening with your account or your social security number.
  • Monitor your credit score. Keep a close eye on your credit score. There are some services that will allow you to track the different factors that influence your score over time, so you can see if an unusual card is being linked to your identity.
  • Use encryption online. Encrypt your documents containing personally identifiable information. We recommend using NordLocker for this.