Over the years the term “identity theft” has become more commonplace, perhaps due to the highly publicized data breaches in the media and the fact that there were 16.7 million identity theft victims in the U.S. in 2017. But one aspect of identity theft that has flown under the radar for most people is synthetic identity theft. As one of the fastest-growing forms of identity theft, synthetic identity theft is believed to have cost financial institutions and credit issuers about $6 billion in 2016.
Synthetic identity theft occurs when a thief takes the components of an identity from different sources, or completely fabricates credentials, to create a new persona to use for their own nefarious purposes. In some cases, the Social Security number is made up, whereas in other cases it belongs to someone – often that of a child. Since children shouldn’t have a credit history and their credit is usually unmonitored, their Social Security number is the perfect ingredient for creating a false identity. This form of theft is appealing to criminals because, given the nature of the personally identifying information (PII), it often goes undetected for many years. One of the reasons it takes so long to detect is because the debt associated with the compromised PII is not shown on victims’ credit file like regular fraud; instead, it’s a sub-file of their credit profile, since only one piece of their identity was used (i.e., their SSN, name, etc.). This makes it much more difficult for credit bureaus to detect and reconcile it. In addition, it’s easy for thieves to create these identities because they don’t need 100 percent of any one individual’s personal information – just a part of it.
Here’s an example of how synthetic identity theft might work: a thief acquires a child’s Social Security number from the dark web and combines it with a random date of birth, a random address and another person’s name to create a fabricated identity. From there, the thief uses this information to establish a credit file for that synthetic identity in order to build a realistic credit history. They will then start making charges using this synthetic identity and even pay off the balances for a period of time to help them establish good credit. By doing so they will eventually get approved for larger lines of credit. That’s when they do the most damage – by racking up the maximum limit on the line of credit. For years the abuse goes undetected until the child applies for their first line of credit – like a student loan – and they learn that someone has been using their personal information. They now have an abundant amount of debt linked to their PII.
Not only will it potentially take years for them to re-mediate, in some cases, they may be forced to delay starting down the road to independence – like waiting on educational opportunities, moving out on their own and more. It’s worth noting that this isn’t something that just happens to children as illustrated in the above example. It can happen to virtually anyone who has a Social Security number, including the deceased.
Similar to traditional identity theft, innocent people are usually the ones left to clean up the mess for something they didn’t do. In this example, by the time the child even discovers their SSN was used, it has likely gone undetected for years and has therefore created substantial damage to their credit. In cases where the Social Security number is made up, it’s difficult to pinpoint where the crime originated or the total extent of the damage.
Synthetic identity theft is not something you can prevent from happening, but you can take proactive measures to protect your personal information and reduce your risks. Here are a few tips:
- Monitor your credit reports throughout the year for any signs of suspicious activity.
- Consider freezing your credit.
- Store and dispose of your personal information securely, especially your Social Security number and driver’s license/state identification card.
- Check your financial statements regularly.
- If you have the financial means, consider purchasing identity theft protection to help save you time monitoring your personal information and provide you access to resolution experts who can assist in resolving any potential fraud.
- Before you invest in an identity protection product, check to see if you already have a benefit you can take advantage of. Identity protection services can sometimes be included in an employee benefits package, part of membership organization package, or even a rider on a homeowner’s insurance policy.
If you’re a parent and want to protect your child’s personal information from this crime, here are some recommendations:
- Do not carry your child’s Social Security Card or papers with this number unless necessary.
- Think twice before providing your child’s Social Security number. You do not need to provide your child’s SSN to enroll your child in school or for your child to attend school, nor do you need to provide your child’s Social Security number at a doctor’s office.
- Shred all papers that contain your child’s personal information with a cross-cut shredder.
- Consider obtaining a state identification card for your child at your state’s licensing office and/or a passport for your child. A verified form of identification is not only useful, and sometimes necessary, for travel, it can also prevent a thief from falsifying a state ID or passport using your child’s stolen information.
- Check with the three major credit reporting agencies to see if your child has a credit report. If they do, consider freezing it.
- If you’ve already checked and don’t have an identity protection benefit you can take advantage of, and you have the financial means, you might consider purchasing identity theft protection that specifically offers family plans that allow for the monitoring of a child’s identity until they turn 18.
If you do find suspicious activity for you or your child on an account or credit report, and you already have identity protection, you can contact your provider to receive assistance on resolving the potential fraud. Leading identity protection providers offer services that can sometimes cut through the red-tape, or even full-service resolution services, as well as having access to resources that may not be available without significant time and effort on your part.
Learn more about identity protection services available to you through The Alumni Insurance Program.
This information is courtesy of Generali Global Assistance, used with permission.