Identity theft occurs when someone takes someone else’s personal and private information to steal money. Synthetic identity theft is a twist on that idea that can create multiple victims.
What Is Synthetic Identity Theft?
Synthetic identity theft occurs when a fraudster creates a new, false identity by mixing information from a real person with information then fraudster creates, or by mixing information from several different victims.
There are three main ways that hackers can create a synthetic identity:
They Can Create a New Credit Profile
The most common form of synthetic identity fraud is the creation of new credit profiles. Fraudsters combine a valid Social Security number with a fake name, then start applying for credit. These applications typically get denied, but the process by itself allows a new credit profile to be created. There are companies that give credit to people with bad credit, so fraudsters know they can get a few hundred dollars out of this scam.
They Can Piggyback
Another common synthetic identity fraud is called a piggyback. Fraudsters look for people with great credit, then gain access to their accounts., where they add then synthetic identity as an authorized user. They won’t actually use this account. Instead, they wait for the major credit card agencies to create a report for the synthetic identity. The criminal can use this new credit profile to apply for loans and credit cards.
They Practice Data Furnishing
Finally, they might use data furnishing. This is a sophisticated scam that requires access to a manager or small-business owner from an established business that is approved to offer information on their customers.. The hackers pose as authorized data brokers, when in fact they are feeding the business fake identities that then get reported to other third parties as legitimate customers. Hackers can launder a large number of fake identities through data furnishing.
It’s difficult to pinpoint how much financial impact synthetic identities have, although losses are believed to be in the billions. Some of these scams can impact your credit rating, which means you need to protect your personal information. Be careful about what you are share, especially when it comes to social media. Consider a credit freeze and ID theft protection, and make sure that you check your credit report regularly.
Written by Robert Siciliano, CEO of Credit Parent, Head of Training & Security Awareness Expert at Protect Now, #1 Best Selling Amazon author, Media Personality & Architect of CSI Protection Certification.