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How to protect yourself from synthetic identity theft?

6 min read

Published December 10, 2024

Table of contents

Key Takeaways

Synthetic identity theft uses real and made-up information to create a new identity that fraudsters can use to establish credit and make fraudulent purchases.
According to the Federal Trade Commission (FTC), synthetic identity theft is becoming increasingly common and may impact to individuals and financial institutions.
To protect against synthetic identity theft, you should guard your personal information, monitor your credit reports, and educate yourself on phishing tactics.

How does synthetic identity theft work?

Synthetic identity theft combines real and fake information to create a completely new identity. Here’s how synthetic identity theft typically works, according to information from the U.S. Government Accountability Office (GAO):

The synthetic identity thief typically gathers bits and pieces of personal information from various sources, such as Social Security numbers, names, addresses, and sometimes even birth dates. With this information in hand, they can create a new persona (essentially a new identity) formed by merging real and made-up details.

Once the synthetic identity has been created, the thief usually establishes a credit profile. They do this by opening new financial accounts, such as credit cards or loans, using the synthetic ID.

Over time, the ID thief gradually builds up the credit history of the synthetic identity, making it appear more legitimate. They might make small purchases and pay them off promptly. The fraudster's ultimate goal is to secure substantial credit limits.

Once the credit limits are high enough, the thief can go on a shopping spree, buying expensive goods and services without any intention of paying for them. This stage of fraud is known as the ‘bust-out.’ They do this by maxing out the credit lines and disappearing, potentially impacting financial institutions and people.

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What are the signs of synthetic identity theft?

Synthetic identity theft looks different from traditional identity theft. Here are a few signs to watch out for:

Unfamiliar accounts: You may notice new credit cards, loans, or utility accounts appearing on your credit report that you don't recognize. These may be tied to your personal information, but the accounts themselves are unfamiliar to you.

Inconsistent personal information: Because synthetic identity thieves combine real and fake information to create a synthetic identity, you may notice inconsistencies in your personal information. Different variations of your name, multiple birthdates, or different addresses associated with your name could be a sign of synthetic identity theft.

Unexpected mail or communications: If you start receiving bills, statements, or collection notices for accounts that you didn't open, it could be a sign of synthetic identity theft. Also, if you receive calls or emails from creditors or debt collectors about debts that aren't yours, it's worth looking into more.

Errors on your credit report: Synthetic identity theft may involve the creation of fraudulent accounts, and these accounts could show up on your credit report with incorrect information or discrepancies.

Difficulty obtaining credit: If you unexpectedly face challenges when opening new credit accounts, it could be due to synthetic identity theft. Fraudulent accounts created using your information may have impacted your credit history or triggered fraud alerts.

Suspicious or unfamiliar activity: Unusual activity on your financial accounts, such as unauthorized transactions, withdrawals, or changes to account information could be signs of synthetic identity theft or other forms of fraud.

It's important to note that the signs of synthetic identity theft may vary, and these are just a few examples. If you suspect that you may be a victim of synthetic identity theft, it's recommended to contact your financial institution, credit bureaus, and law enforcement agencies for more help and guidance.

How common is synthetic identity theft?

Synthetic identity theft is a growing concern in today's digital age. According to the FTC, synthetic identity theft makes up most identity theft cases. A FTC report revealed that synthetic identity theft may make up around 80–85 percent of all identity fraud cases.

Additionally, according to the FTC, the exact number of instances of synthetic identity theft may be underreported due to lack of public awareness and because of its complex nature. Because synthetic ID theft involves using bits and pieces of information from different sources, it may make tracking tricky. Lack of awareness about synthetic identity theft

While there are no exact numbers to pin down how common synthetic identity theft is, this type of fraud may have a significant impact. It is important to be educated on synthetic identity fraud and take preventative measures to help protect your personal information.

How to recognize and prevent synthetic identity theft?

Synthetic identity theft is a growing concern in today's digital era. To effectively protect yourself against this type of fraud, it is crucial to be aware of the signs of synthetic fraud and take proactive measures. Here are some key steps to recognize and protect against synthetic identity theft:

A chart that explains how to help prevent synthetic identity fraud. Tips include the following: securely store Social Security cards at home, create strong and unique passwords, avoid clicking on unfamiliar links, and monitor your credit report for suspicious activity.

Guard your personal information. Safeguarding your personal information may help against synthetic identity fraud. You should also be cautious when sharing sensitive details online. Make sure that your Social Security number, birthdate, and financial information are securely stored and not easily accessible.
Strengthen passwords and use two-factor authentication. Create strong, unique passwords for all your online accounts and change them periodically. Enable two-factor authentication whenever possible to add an extra layer of security. This helps protect against identity theft, including the synthetic identity type.
Educate yourself on phishing and social engineering tactics. Synthetic identity thieves often employ phishing emails and social engineering techniques to trick individuals into revealing personal information. Stay informed about these tactics to protect yourself. Be cautious of suspicious emails, messages, or requests for personal information and avoid clicking on unfamiliar links.
Monitor your credit report. Regularly monitoring your credit report is essential for detecting any suspicious activity. Check for unfamiliar accounts, inquiries, or discrepancies in your personal information. Consider using a credit monitoring service that alerts you to any changes or potential signs of synthetic ID theft.
Be cautious of unsolicited credit offers. Fraudsters often use unsolicited credit offers to gather personal information for synthetic ID fraud. Be wary of unexpected emails, phone calls, or mailings offering pre-approved credit. Verify the legitimacy of the sender before sharing any personal details.
Use secure networks and devices. When accessing financial or personal accounts, use secure and encrypted networks. Avoid using public Wi-Fi networks or shared devices for sensitive activities. Install reliable security software on your devices to protect against malware or spyware that may compromise your personal information.

Remember, preventing synthetic identity theft requires a proactive approach and ongoing vigilance. By following these tips and monitoring your accounts regularly, you can safeguard your personal information and reduce the risk of falling victim to this type of fraud.

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