‘Synthetic’ identity theft blends real and fake data to fool lenders

Identity theft is an ever-evolving crime. As credit bureaus and individuals catch on to the schemes of identity thieves, the con artists simply modify their tactics. Scammers are now combining information from multiple individuals to invent a false identity, a technique called “synthetic” identity theft. It’s so hard to detect; you might be a victim and not even know it. The Deloitte Center for Financial Services projects synthetic identity theft fraud will generate at least $23 billion in losses by 2030.

How the scam works

Scammers pull together a stolen Social Security or Social Insurance number (often belonging to a minor or someone with no credit history), the address of an abandoned property, and a fake name and birth date.

Using that information, the scammer applies for a credit card. Initially, they will be declined since they don’t have a credit profile, but that creates a record of a “person” that doesn’t actually exist.

Next, the scammer adds that “person” to one or more legitimate accounts. Over time the scammer builds up a credit history. They may even make charges and payments over several years until they can qualify for large lines of credit. Once they are approved for a high line of credit, they do what is called a “bust-out.” The con artist charges their credit cards to the limit, pays nothing, discards the identity and disappears.

One Ohio consumer figured out someone had been filing taxes under their Social Security number but other identifying information, reporting to the BBB Scam Tracker: "I learned that someone had been filing taxes using my Social Security number. I have not filed taxes since 2019 due to disability, so I knew something was wrong. After a stressful hearing, I proved it was not me. The printout I received showed the state, employer and income tied to my identity, going back to 2016. I have since reported it and placed a hold on my credit report, but I believe the scammer may still be using my information."

If your Social Security or Social Insurance number has been used in synthetic identity theft, it will be difficult to detect. Negative credit reports will be tied to your Social Security number but not your name, phone number and address. That means fraud alerts, credit monitoring and credit freezes won’t stop the scammers or alert you to what is happening. However, unpaid debts left by the scammer can affect your ability to take out loans or credit. Also, jilted creditors will eventually track the debts back to the Social Security number and, ultimately, its real owner.

How to protect yourself from synthetic identity theft

—Minimize your exposure. Don’t give out your Social Security or Social Insurance number if it isn’t absolutely necessary. When a business, medical office or individual asks for that information, don’t be afraid to ask them why they need it and how they will protect your personal information.

—Protect your child’s personal information. A child’s identity is appealing to scammers due to their clean, blank slate.

—Keep an eye on your communications. Monitor any mail, phone calls, email or other communications you receive. Be alert if something arrives out of the blue or doesn’t make sense. If you receive any mail or phone calls regarding you or your child that seem like a red flag, follow up right away.