What is synthetic identity theft?

Synthetic identity theft occurs when criminals create fraudulent identities by combining fake and legitimate information. This unlawful practice is more sophisticated, difficult to prevent, and challenging to detect. Traditional identity thieves usually try to impersonate their targets and perform specific actions on their behalf. Synthetic identity theft is different as fraudsters do not attempt to mimic their victims. Instead, such criminals assemble completely new fabricated identities.

What does synthetic identity theft mean?

Synthetic identity theft means that criminals set up fake identities based on both legitimate and falsified information. Fraudsters use bits and pieces of authentic details to make the fictitious persona more credible.

Typically, they will retrieve real Social Security Numbers (SSN) and combine them with completely made-up personal details. The most common goal of synthetic identity theft is financial fraud (such as taking out loans). However, there are more reasons for building a fake identity:

• Criminals might hide under a false persona to evade persecution by the authorities or government institutions.
• People might need a fake identity to get healthcare benefits.
• Undocumented immigrants might cover up their tracks by using the Social Security Numbers of legal citizens.
• Fraudsters could use synthetic identity theft to fund illicit activities or terrorist groups.

Fraudsters that conduct these theft operations essentially invent new identities. The standard strategy is to use one piece of valid information and surround it with bogus details. Thus, while the SSN might be legit, details attached to it such as names, addresses, or dates of birth will not be.

The FTC had announced that synthetic identity theft accounted for about 85% of all identity fraud in the US. However, the trend has seen a slight decline in 2020. This decrease mainly relates to the fact that many financial institutions have revamped their fraud mitigation strategies.

How do criminals commit synthetic identity theft?

Synthetic identity theft is not about pretending to be the victim. It is about exploiting the victim’s information to create a fake persona. Since this is not a direct attack against a person, the fraudulent identity might remain undetected for years.

Even if you check your credit reports for fraudulent activity, it does not mean that you are safe. Someone might still use your data to create a synthetic identity. Then, criminals can get loans, file for tax returns, or get medical care under the names of people that do not exist.

The question remains: how do criminals get personally identifiable information like SSNs? There are several options:

• Purchasing stolen sensitive information from the dark web. Various personal details are available on the black market. One of our investigations has reported that SSNs and credit card details could be available for as low as $4. Thus, it becomes relatively simple to retrieve personal information and use it for nefarious purposes.
• Tricking people into revealing data. Fraudsters could target specific individuals in hopes of extorting personal details. For instance, phishing scams or other social engineering tactics could attempt to swindle people out of their data.

Additionally, experts note that criminals prefer exploiting the information of specific people for synthetic identity theft:

• Children or even infants. Minors are unlikely to use their SSNs before reaching adulthood. Thus, synthetic identity theft could remain unexposed for years. The reality is that many cases of identity fraud involve minors.
• Older people. Senior citizens might rarely use their credit. Thus, they have fewer chances of learning that criminals exploit their data.
• Homeless people. They might have no means of monitoring their credit information.

Ways to defend against synthetic identity theft

• Do not reveal your SSN or other personal data unnecessarily. There are moments when you have no other option but to supply your SSN. For instance, you need it for credit applications or when applying for certain federal benefits. However, certain situations do not require your SSN. Thus, it might not be mandatory for you to provide it in, say, doctor or dentist intake forms. Additionally, never reveal your SSN randomly online. If you do, take the time to ask questions on how a specific service or institution will use/store your SSN.
• Frequently check your credit score. In addition to monitoring your credit score, pay attention to institutions that rely on SSNs or other personal details. Stay in touch with your bank, IRS, credit card provider, and health insurance groups. With enough information, you should notice if criminals have stolen your data to commit synthetic identity theft.
• Do not fall for phishing scams. You might receive an email message informing you about issues with your credit. There might be a link leading to a website resembling your bank. However, all of this might be a part of a scam. Always contact banks or other financial institutions directly instead of following links or opening files.
• Protect your documents and other online data. You can encrypt documents containing personal information for extra protection. Also, avoid visiting suspicious websites and submitting sensitive information to them. A VPN can also help keep all your communications secure and private. Atlas VPN also goes a step further. Our SafeBrowse feature automatically blocks access to websites suspected of malicious or fraudulent activities. Thus, this protection will prevent you from encountering websites attempting to extort personal information.

Final notes on synthetic identity theft

All in all, synthetic identity theft typically continues over a relatively long time. While traditional identity fraud happens rather quickly, criminals take their time with synthetic identities. Many SSNs could also be available on the dark web, costing less than Starbucks coffee.

Their goal is to build excellent credit scores under the fake alias. Then, the criminals will “bust out,” meaning they will take out the largest loans possible. With all said and done, fraudsters will abandon the synthetic identity without any intention of ever paying to financial institutions. Victims are the ones left to pick up the pieces. The first step will be proving that they are not the culprits: not the ones responsible for the fake identity. Thus, it might take a long time for them to reclaim control over their finances.

Even though synthetic identity theft might only pay off in the long run, it is a fast-growing financial crime. We hope you stay vigilant and always try to stay in control of your identity. Also, consider identity theft protection services that can help you stay safe.