{"id":24987,"date":"2021-06-24T14:53:58","date_gmt":"2021-06-24T22:53:58","guid":{"rendered":"https:\/\/www.spokeo.com\/compass\/?p=24987"},"modified":"2022-09-06T16:48:34","modified_gmt":"2022-09-07T00:48:34","slug":"what-is-synthetic-identity-theft","status":"publish","type":"post","link":"https:\/\/www.spokeo.com\/compass\/what-is-synthetic-identity-theft\/","title":{"rendered":"Synthetic Identity Theft: The Billion-Dollar Crime You\u2019ve Never Heard of"},"content":{"rendered":"\n

Identity theft is a sneaky sort of crime.  While there are plenty of common signs that can indicate your identity has been stolen<\/a>, it\u2019s up to the individual consumer to be educated and vigilant enough to notice them.  But what would happen if the criminal only used part of your identity? <\/p>\n\n\n\n

That\u2019s how synthetic identity theft<\/em> works.  Scammers stitch together parts of real identities with outright fakery, creating plausible \u201cFranken-identities.\u201d  This type of scam doesn\u2019t usually have the kind of impact on your personal credit that you would experience with conventional identity theft, so it\u2019s much harder to know if your information has been compromised. <\/p>\n\n\n\n

How Synthetic Identity Theft Begins<\/h2>\n\n\n\n

Synthetic identity theft begins in the same way as other identity frauds, with the compromise of someone\u2019s personally identifying information:  bank or credit card accounts, a driver\u2019s license, or \u2014 the gold standard \u2014 a social security number.  That\u2019s where the creative part starts.  The scammer stitches together real information, perhaps one person\u2019s SSN with another\u2019s driver\u2019s license number, and then fleshes out a persona with completely fabricated information. <\/p>\n\n\n\n

You\u2019ve probably encountered this kind of made-up identity before, in other contexts.  Most of us have seen fake users (\u201csock puppets<\/a>\u201d) on social media or in the comments sections of busy forums, where those users spread misinformation for fun and profit or simply do a bit of trolling.  It\u2019s also how scammers \u201ccatfish\u201d unsuspecting users<\/a> on social media and dating sites. <\/p>\n\n\n\n

FIGHT SYNTHETIC IDENTITY THEFT WITH SPOKEO PROTECT<\/em><\/strong><\/a><\/p>\n\n\n\n

Synthetic identity theft applies those same principles to fraud, patiently building a persona over a period of months or even years, before making a play that nets a serious financial payout.  It\u2019s frighteningly effective because it exploits the workings of the financial system.<\/p>\n\n\n\n

How Scammers Create a Plausible History<\/h2>\n\n\n\n

Once the identity has been created, scammers set about bringing it to life.  This may include setting up a mailing address in a specific neighborhood, setting up subscriptions, or a tour of duty as a sock puppet on social media, complete with stolen photos and lots of likes and shares from other sock puppet accounts. <\/p>\n\n\n\n

The next step is to begin establishing credit, which follows the industry\u2019s well-worn path.  The fake person opens an account at a bank or credit union, using a forged ID.  The newly created \u201cperson\u201d might be added as a second user on an existing account, belonging either to a real person or a previous synthetic identity.  Another tactic is to establish credit through the use of a secured, low-limit credit card or by making purchases from high interest lease-to-own vendors, car dealerships and other businesses that routinely work with consumers who have new credit. <\/p>\n\n\n\n

Scammers of course are well versed in the cagey use of purchases and payments to build a good credit score in a hurry.  In a relatively short time, they\u2019re in a position to access a significant degree of credit.  That\u2019s when the payoff portion of the cycle kicks in. <\/p>\n\n\n\n

When \u201cBusting Out\u201d Means Cashing In<\/h2>\n\n\n\n

Eventually, once the amount of credit available to the synthetic identity is large enough, the criminals behind the identity pull the trigger and cash out.  They\u2019ll maximize all of the available credit, at which point the identity disappears like the mirage it is.  The banks and credit card companies, and eventually the collection agencies working on their behalf, find themselves grasping at thin air.  This step in the process is referred to as \u201cbusting out.\u201d <\/p>\n\n\n\n

Really brazen criminals will increase their take by exploiting the very protections put into place to protect consumers against conventional identity theft.  They\u2019ll dispute the charges they themselves have used to pillage the credit account, under the terms of Section 605B<\/a> of the Fair Credit Reporting Act.  Credit reporting agencies only have four days to respond to a fraud claim, which isn\u2019t usually time enough for a full investigation.  They\u2019ll usually purge those charges at least temporarily while they finish the investigation (aka \u201ccredit washing\u201d), which gives the scammers an opportunity to once again max out their credit before vanishing. <\/p>\n\n\n\n

It\u2019s a major headache for the financial sector.  An in-depth 2020 report from The Federal Reserve<\/a> collated data from across the industry, concluding that synthetic identity theft was one of the largest and fastest-growing threats faced by financial institutions.  Even worse, because it carefully targets (or exploits!) gaps in the system and the regulatory environment, it\u2019s especially hard for financial institutions to detect and prevent. <\/p>\n\n\n\n

Why Synthetic Identity Theft Should Matter To You<\/h2>\n\n\n\n

Much of the literature around preventing synthetic identity theft \u2014 like the report from the Fed \u2014 is aimed at financial institutions and government departments, who are attempting to solve the problem \u201cfrom the top down.\u201d  That\u2019s because it\u2019s the institutions themselves that bear the direct financial costs, and the corresponding law enforcement and regulatory agencies who will be responsible for trying to close the legal and regulatory loopholes that make it possible. <\/p>\n\n\n\n

Unlike conventional identity theft, you as the individual consumer are unlikely to see any direct financial repercussions, even if your ID becomes part of that synthetic identity.  So why should you care or exert any effort toward making it harder \u201cfrom the bottom up\u201d? <\/p>\n\n\n\n

There are two main reasons.  The first is that it\u2019s costing financial institutions billions of dollars and inevitably consumers will end up paying for it in increased fees or decreased services.  The second is that the SSNs used by scammers tend to be taken from the most vulnerable people:  children, the elderly and those who are homeless or living in care.  The misuse of your child\u2019s SSN, for example, could mean you\u2019ll have to clear a ton of bad credit \u2014 perhaps even a criminal record \u2014 attached to that SSN before your kid can embark on a normal adult life.  It\u2019s not a happy prospect. <\/p>\n\n\n\n

What Can You Do To Prevent Synthetic Identity Theft? <\/h2>\n\n\n\n

As an individual there\u2019s little you can do to prevent synthetic identity overall, but you definitely can<\/em> take steps to make it harder for your own identity \u2014 or that of your family members \u2014 to be misused. <\/p>\n\n\n\n

Place a <\/strong>Credit Freeze<\/strong><\/a> on Your Childrens\u2019 SSNs<\/strong><\/p>\n\n\n\n

This blocks potential creditors from pulling a credit report, making it much harder for scammers to build out a new credit history.  If you have elderly parents with no new need for credit, you should talk to them about doing the same.  If you\u2019re the caregiver for a dependent adult or if you hold power of attorney for a relative, you can make that decision unilaterally (but it\u2019s always best to discuss it beforehand with family, to be sure your motives won\u2019t be misconstrued). <\/p>\n\n\n\n

Get Dark Web Monitoring<\/strong><\/p>\n\n\n\n

Criminals typically buy personally identifying information in bulk on a shady corner of the internet known as the \u201cdark web.\u201d<\/a>  As part of the identity protection that comes with your Spokeo Protect<\/a> membership, you can set up real-time alerts to notify you know when your information is offered up for sale there. <\/p>\n\n\n\n

Place Fraud Alerts as Needed<\/strong><\/p>\n\n\n\n

If your personal information shows up on the dark web, placing a fraud alert<\/a> warns credit issuers to verify any new credit with you personally.  A standard fraud alert lasts one year, or you can place an extended fraud alert that\u2019s valid for seven years. <\/p>\n\n\n\n

Participate in SSN Verification<\/strong><\/p>\n\n\n\n

The Social Security Administration has introduced a service called \u201celectronic Consent-Based Social Security Number Verification<\/a>,\u201d or eCBSV for short. If you give your consent, credit issuers can use the service to verify that the name and date of birth associated with the SSN are legitimate. <\/p>\n\n\n\n

Watch for \u201cPiggybacking\u201d<\/strong><\/p>\n\n\n\n

Scammers will sometimes piggyback their new accounts onto the credit of real people, expanding your family \u2014 so to speak \u2014 with their fake persona.  Scrutinizing your account statements closely is the best way to catch this and nip it in the bud. <\/p>\n\n\n\n

A Final Word<\/h2>\n\n\n\n

The problem of synthetic identity theft isn\u2019t going away any time soon, because billion-dollar industries \u2014 even illicit ones \u2014 tend to take on a stubborn life of their own. <\/p>\n\n\n\n

Your own personal efforts to make a difference may feel like a single grain of sand on a very large beach, but that\u2019s really the point:  There are a lot of beaches and they\u2019re all made up of those single grains of sand.  If you do your part (and encourage those you know to do the same), eventually this kind of scam will become harder to execute successfully. <\/p>\n\n\n\n

References:<\/h3>\n\n\n\n