Synthetic Identity Theft: What It Is and How to Protect Yourself

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There is a new, troubling twist about identity theft.

Instead of stealing your entire identity, some thieves create identities that combine real data such as your SSN with some fake information to create a new identity. They’ll then use this new identity to defraud financial institutions, wreaking havoc on your credit score.  

Imagine trying to get a mortgage for your dream home, only to discover that your credit rating has dropped mysteriously, and now you’re considered to be financially unreliable.

And just when you thought you had heard it all, it comes to your attention that multiple bank accounts and credit cards have been opened in your name. That’s when it dawns on you that you’ve fallen victim to synthetic identity theft.

But what exactly is synthetic identity theft? We’ll delve into the crux of synthetic identity theft and give you some tips on how you can protect yourself.

Synthetic Identity Theft Explained

Synthetic identity theft is a type of fraud in which a fraudster pairs legitimate and fake information to create a new identity.

The scam involves combining real social security numbers with other pieces of fake information, such as names, birthdates, addresses—to create an entirely new identity. Much of this personal data is stolen via data breaches or obtained from the dark web.

For example, a criminal can steal the social security number of a minor and create a new identity by pairing that number with a different but real name, address, phone number, and date of birth. The fraudster can use the newly created identity to open credit accounts, apply and get credit cards, and make fraudulent purchases.

In most cases, a criminal will use a synthetic identity to apply for a credit card. Because this synthetic identity doesn’t have a credit profile, the initial application will likely be turned down. However, it creates a record of a person who doesn’t exist. In other words, a new credit file is created for this fictitious person.

The criminal will use the newly created account responsibly to build up their credit score and history for a certain period.

With time, they’ll build their credit score and finally get approved for credit. Then, they will do what’s called “burst out”—charge the card to its limit, then discard the identity and disappear without paying anything (check this post for more identity theft examples).

But how does synthetic identity theft affect you?

Glad you asked! If a criminal steals your social security number to create a synthetic identity, the crime could have a catastrophic effect on you. For instance, it could negatively impact your credit rating, making it difficult for you to open new lines of credit.

How to Protect Yourself 

Since your social security number is the key ingredient for creating synthetic identities, the best way to protect yourself is to safeguard it. Here are a few things you can do to protect yourself from synthetic identity theft.

1. Keep Your Social Security Number (SSN) Secure

Always keep your SSN and any document containing the number safe and secure. Shred any documents that contain your personal information before discarding them. Also, if asked to provide your SSN, ask why it’s needed and what it will be used for.

2. Beware of Phishing Attempts

Sometimes, a cybercriminal might masquerade as a trusted entity of some kind—bank, credit card company, government official—to trick you into sharing your personal information.

Phishing scams may come in the form of email, text, or even a call.

To be on the safe side, never open suspicious email links, even if they look like they’re from trusted sources. Also, if you receive a call from a suspicious person, always confirm their identity with the organization they claim to work for.

3. Enroll in Credit Monitoring

Enrolling in credit monitoring services can help you stay vigilant at all times. Some credit monitoring companies will even perform dark web scans to search for your name and social security number in the black market.

Now that you know the nitty-gritty surrounding synthetic identity theft, we hope you’ll stay vigilant at all times. Security starts with you!

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