Synthetic identity fraud combines real and fake information to create a new identity — and victims often don't find out until they apply for a loan or their child turns 18.
Most people understand traditional identity theft: a criminal steals your personal information and uses it to open accounts in your name. Synthetic identity theft is different — and in many ways more insidious. Instead of stealing a complete identity, fraudsters combine a real Social Security number with a fabricated name, address, and date of birth to create a brand-new, fictional person.
The Social Security numbers most commonly used in synthetic identity fraud belong to children, elderly people, and recent immigrants — groups who rarely apply for credit and are unlikely to notice a fraudulent file being built in their name. The fraud can go undetected for years while the criminal slowly builds credit history for the synthetic identity, eventually cashing out with large loans or credit lines before disappearing.
Synthetic identity fraud is now the fastest-growing financial crime in the United States, costing lenders an estimated $6 billion annually. Unlike traditional identity theft, there's often no victim who notices fraudulent charges — the synthetic person doesn't exist, so no one is checking their credit. This makes it extremely difficult to detect and prosecute.
Parents should place a credit freeze on their children's Social Security numbers as soon as they're issued. Children shouldn't have credit files at all — if a freeze reveals an existing file, it's a sign their SSN has already been compromised. Similarly, checking whether a Social Security number has an associated credit file is a useful early warning step for anyone who suspects their number may have been used.
For adults, the best defenses are the same as for traditional identity theft: a credit freeze at all three bureaus, enrollment in a credit monitoring service that alerts you to new accounts, and careful protection of your Social Security number. Never carry your Social Security card in your wallet, and be extremely cautious about any request for your SSN that isn't from a financial institution, employer, or government agency.
Safety 1st Editorial Team
This article is credited to Safety 1st Editorial Team. Safety 1st Consumer Protection has republished this content with attribution.