Understanding Synthetic Identity Fraud: What You Need to Know

What is synthetic identity fraud?

Synthetic identity fraud (SIF) is a sneaky type of crime. It happens when criminals make up fake identities using both real and fake information. They might use a real person's Social Security number but add a fake name, birthday, and address. Or they might mix information from different people to create one fake identity.

This type of fraud is different from regular identity theft. In regular identity theft, a criminal steals your whole identity and uses it right away. With SIF, criminals build a brand-new identity from scratch. They use it to open bank accounts, get credit cards, and take out loans. The fake identity looks real to most people and companies.

SIF is becoming one of the fastest-growing financial crimes in America. Criminals love it because it's hard to catch. They can use these fake identities for months or even years before anyone notices something is wrong. By the time the fraud is discovered, the criminals have already stolen lots of money, potentially wrecking multiple victims’ lives in the process.

How synthetic identity fraud works

Here's how criminals create synthetic identities. First, they get a real Social Security number. They often steal numbers from children, elderly people, people who don't use credit much, or even the deceased. Then, they make up a fake name, address, phone number, and birthday to go with that Social Security number.

Next, they start building a credit history for this fake person. They apply for a small credit card or loan. At first, they might get rejected. But they keep trying at different places. Once they get approved somewhere, they're careful to make payments on time. This makes the fake identity look trustworthy.

After months or years of building good credit, the criminals strike. They max out all the credit cards and loans they can get. Then they disappear. The fake identity gets left behind with thousands of dollars in unpaid bills. Banks and credit card companies lose money, and sometimes real people get caught in the mess.

Synthetic identity fraud is growing fast

SIF has exploded in the past year. Criminals are getting smarter about creating fake identities that look completely real. They use stolen information from data breaches, which happen all the time.

The problem has gotten worse during recent years because more things have moved online. When you apply for credit cards or loans over the internet, it's easier for criminals to slip through. Companies can't always tell the difference between a real person and a fake identity created by a fraudster.

Young people and children are becoming big targets. Criminals steal Social Security numbers from kids who won't use credit for many years. By the time these children grow up and try to get their first credit card, they discover that someone else has been using their identity for years. The damage can take years to fix.

Why synthetic identity fraud is hard to detect

SIF is incredibly hard to catch for several reasons. The biggest problem is that the identity is partly real. When companies check if someone is real, they look at the Social Security number first. If that number is real, the system often says everything is fine. The computer doesn't know that the name and address are fake.

Another reason SIF is tricky is that criminals build credit slowly. They don't rush in and immediately max out cards like regular identity thieves do. Instead, they act like normal people for months or years. They make small purchases and pay bills on time. This makes banks and credit card companies trust them.

Many victims don't even know their information is being used. If a criminal steals a child's Social Security number, that child won't check their credit report for many years. Elderly people who don't use credit might never notice. And because the fake identity has a different name and address, victims rarely get any warning signs.

Companies also struggle to work together on this problem. Different banks and businesses don't always share information about suspicious accounts. A criminal might get rejected at one place, then succeed at another place that doesn't know about the rejection. By the time patterns become clear, the fraud has already happened.

Finally, the criminals keep changing their methods. As soon as security systems learn to catch one trick, fraudsters come up with new ones. They're always one step ahead. This makes it nearly impossible for any single company or person to fully protect against SIF.

A typical example of synthetic identity fraud

Meet Sarah, a hard-working nurse and single mom. When her daughter Emma turned 18, Emma tried to apply for her first credit card to help build credit for college. But her application was rejected. Confused, Emma checked her credit report and got a huge shock.

Someone had been using Emma's Social Security number since she was 10 years old. The fake "Emma" had a different last name and lived in another state. This fake Emma had opened five credit cards, gotten a car loan, and even had an apartment lease. Everything was maxed out with over $45,000 in debt.

Real Emma was devastated. She had to file police reports and dispute every fraudulent account. She missed her college application deadline because she was too stressed to focus. Her mom Sarah spent hundreds of hours on the phone with credit bureaus, banks, and police. They even had to hire a lawyer to help clear Emma's name.

The whole process took two years to mostly fix. Some negative marks still show up on Emma's credit report. She still gets collection calls from time to time. The criminal who did this was never caught. Sarah wishes she had known about identity theft protection services when Emma was younger. It could have caught this fraud before it became a nightmare.

How IDShield helps protect you from synthetic identity fraud

Luckily, you don't have to face synthetic identity fraud alone. IDShield offers powerful protection that can catch SIF before it ruins your life. Their services watch over your personal information 24/7. They provide real-time alerts when something suspicious is detected with your identity.

IDShield is different because it helps protect you in two important ways. First, it helps catch synthetic identity fraud from the start through constant monitoring. Second, if you do become a victim, IDShield's team of licensed private investigators works to restore your identity to its pre-theft status. They can handle the paperwork, phone calls, and legal steps needed to restore your identity.

Key IDShield services that catch synthetic identity fraud

Credit score tracker: This tool gives you regular access to your credit score so you can spot problems early. If someone is using your Social Security number to build fake credit, your score might change in weird ways. The tracker helps you catch these warning signs before criminals can do serious damage.

Password manager: Many criminals steal personal information by hacking into your online accounts. IDShield's password manager creates strong passwords for all your accounts and stores them safely. This makes it much harder for criminals to break into your accounts and steal the information they need to create synthetic identities.

Credit score monitoring: This service watches your credit reports from major credit bureaus all day, every day. If anyone tries to open a new account using your Social Security number, you get an instant alert. You can stop the fraud before the fake identity gets built up. This monitoring catches suspicious activity that you may never notice on your own.

Personally identifiable information (PII) monitoring: IDShield includes dark web monitoring where criminals buy and sell stolen information. They monitor your Social Security number, phone number, email addresses, and more. If your PII shows up somewhere it shouldn't, you'll know immediately so you can take action.

Help protect your identity today

Don't wait until you become another victim of synthetic identity fraud. Every day without protection is a day criminals could be building a fake identity using your information or your child's Social Security number. The damage can take years to repair and cost you thousands of dollars.

IDShield makes monitoring easy and affordable, starting at just $14.95 per month for an individual plan. You get 24/7 monitoring, instant alerts, and a team of experts ready to help if fraud happens. Plus, IDShield backs their service with up to $3 million identity fraud protection for certain identity theft related expenses.

Take control of your identity now. Visit IDShield's individual plan page to sign up for identity theft and privacy protection. Your peace of mind is worth it. Don't let synthetic identity fraud steal your future—protect yourself and your family today.

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IDShield is a trademark of Pre-Paid Legal Services, Inc. (“LegalShield”). LegalShield provides access to identity theft services through membership-based participation. IDShield is a product of LegalShield. Some of the services provided under the plan by third party providers are subject to change without notice. All Licensed Private Investigators are licensed in the state of Oklahoma. The information made available in this blog is meant to provide general information and is not intended to provide professional advice, render an opinion, or provide are commendation as to a specific matter. The blog post is not a substitute for competent and professional advice. Information contained in the blog may be provided by authors who could be third-party paid contributors. All information by authors is accepted in good faith; however, LegalShield makes no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of such information. The Identity Theft Insurance is underwritten and administered by American Bankers Insurance Company of Florida, an Assurant company. LegalShield is not an insurance carrier. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions.

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