The term may not sound familiar, but the most common form of identity theft these days is “synthetic identity theft.” Get to know this type of identity theft, because you may not even realize you are a victim. Synthetic identity theft is increasingly more common. Identity thieves are regularly turning to this method due to the fact that it’s far more difficult to prevent.
Synthetic Identity Theft
What is synthetic identity theft? How does it work?
By combining some factual, stolen information with completely fake information, fraudsters are able to convince banks and credit monitoring institutions that the fake identity is real. Synthetic identity theft differs from traditional identity theft in that the fraudster is not pretending to be the person whose information they stole or acquired. Instead, they’re using that information to create a brand new identity for themselves. This is where the term “synthetic” originated.
Thieves specializing in synthetic Identity theft primarily focus on stealing Social Security Numbers. Most will look for underutilized SSNs, such as those belonging to children, seniors or incarcerated individuals. That number is then applied to a new identity. With the stolen SSN and the new identity, fraudsters will apply for a credit card or loan. This application may get rejected, but the initial purpose it to create a credit inquiry with credit rating institutions such as Equifax or Transunion.
Once the inquiry exists, it becomes easier for fraudsters to legitimize the synthetic identity. Further applications for credit cards or loans are more likely to succeed. Fraudsters may often open small accounts, typically ones designed for those with little to no credit history, and work on building positive credit history over time. Once a positive history is built up, and the fraudster can draw increasingly larger lines of credit, the thief will stop making payments after utilizing the accounts. This eventually comes back to the real owner of the social security number, who may never have known that their SSN was stolen because the credit checks never appeared on their own credit report.
Another method utilized for synthetic identity theft does not involve stealing used social security numbers, but by using what is known as Credit Profile Numbers (CPNSs. These 9-digit numbers look like social security numbers but are not. Instead, “credit repair” companies will create a number that looks like an SSN, but one that is at the time unused by the Social Security Administration. In effect, they are creating new SSNs and selling them to people.
This is done to defraud financial institutions in hopes of creating a new persona and then applying for credit cards or loans without having to use a SSN attached to a poor credit history. It’s simply illegal to use CPNs in place of an official SSN. Nevertheless, some credit repair companies are selling them and creating trouble for their clients who use them.
To be clear, there is no quick fix for bad credit history. Official credit counseling and a change in habits to both spending and bill paying is the only way to properly repair bad credit.
How do you protect yourself from synthetic identity theft?
Unfortunately, synthetic identity theft is nearly impossible to prevent with current technology. As long as someone creates a new identity using your stolen information, it’s extremely difficult to track down and verify that the information is stolen until after the damage has been done. However, there are ways to minimize the risk and to check whether you’ve become a victim.
- Regularly acquire copies of your credit reports.
This is an important step to ensuring that there are no discrepancies on your credit report. By law, each credit monitoring agency must give you a free credit report once a year. However, you can pay to have your credit report given to you at any time. There are also free credit services, such as Credit Karma, which provide you with regularly updated credit reports and credit score information. Some financial institutions also provide free credit reports as an added benefit to their customers.
- Ask credit monitoring agencies for fragmented files.
A fragmented file is a sub-account within the credit report. This would reveal any accounts opened with your Social Security Number under a different name. If there are any fragmented files on your account, this is the best indication you may have been a victim of synthetic identity theft.
- Do not throw private information in the trash.
Identity thieves will often check trash cans for private information such as Social Security Numbers. Avoid throwing anything with SSNs or other personal identifying information in the trash. If you do, make sure to completely shred the documents and mix the shreds so that they can’t be pieced together.
- Do not click on unknown or strange links online, or enter information into unsecured websites.
Some online hackers will use links that take you to fake websites made to look real. Avoid clicking on suspicious links, and check to make sure all websites you visit that ask for private information are secure. If the website does not have an “HTTPS” in the web address, it is not secure. Only secure, verified websites can receive high-level HTTPS TLS/SSL certificates from official certificate-granting authorities gm0aotx.
- Create strong passwords and change your password every six months.
Many websites have a limitation on password length. However, if allowed by the website, a strong password combines letters, numbers and symbols. Also, avoid using the same password for all of your accounts.
- Do not carry your Social Security Card with you.
Avoid carrying your Social Security Card in your wallet or purse so it’s not lost or stolen. If you have a safe at home, keep your card there. Otherwise, put the card somewhere in your home that is secure.
What to do if you’ve become a victim of synthetic identity theft
If you believe you are a victim of synthetic identity theft, don’t delay in taking steps to put an end to it and catch the thieves. You will want to follow steps similar to traditional identity theft:
- Contact your local police department.
Although it’s unlikely that the thief who stole your identity lives nearby, contacting your local police is a good first step. This will put the incident on the radar for law enforcement, and will enable local police to escalate the report to higher authorities. Should the identity thief be local, this may help the police begin the process of tracking down the culprit. The Federal Trade Commission will also use these reports as evidence you took steps to deal with the situation.
- Contact the Federal Trade Commission
Filing a report with the FTC is another important step. The FTC oversees enforcement of identity theft on a national level.
You can file a complaint by going to https://www.identitytheft.gov/ or call 1-877-ID-THEFT (438-4338). This will also allow you to formulate a plan to recover from the negative impacts of identity theft.
- Apply for a new Social Security Number
If you’ve verified that your SSN has been stolen, you can apply for a new one from the Social Security Administration. The Social Security Administration will allow you to apply for one yourself, or for a child whose information has been stolen. You can do so by applying online at https://www.ssa.gov/ssnumber/, or by going to your local SSA office.
Resources for victims of Synthetic Identity Theft
Given the frequency of identity theft, many public and private entities exist to help identity theft victims recover from fraud. The federal government, in particular, provides resources to help victims understand their rights and responsibilities regarding identity theft. The following are some resources available to deal with the situation before, during and after identity theft.
Identity Theft Protection Services from Mountain Alarm
As part of a comprehensive offering of products and services, Mountain Alarm offers Identity Theft Protection through our interactive services partner, Alarm.com. For as little as $5.00 per month, our customers receive:
1. Full assistance with identity theft issues
2. Active alerts of potential threats
3. Full identity theft restoration for those who have already been affected
4. One year follow-ups once the identity theft victim has returned to pre-theft status
Contact your local branch of Mountain Alarm for more information.