According to the Federal Trade Commission, synthetic identity theft is the fastest growing type of identity theft and is estimated to account for 85 percent of all identity fraud cases. This type of identity theft is considered to either include a partial takeover of someone’s identity which makes it more difficult to detect, or, a brand new identity created with fake information. Synthetic identity theft is not only difficult to detect in most cases but it also inflicts the most damage as it will be illustrated below.
As mentioned, synthetic identity theft occurs when thieves create new identities based on completely made up information or a combination of fake and real information. The strategy to use pieces of someone’s identity in conjunction with some fake information or create completely new identities based on a complete set of fake information depends largely on the type of fraud that the thieves plan to commit.
For example, someone’s social security number or national identification number may be used in conjunction with other fake information to open a business bank account and use newly created fake identities as customers to give the impression of a successful business which allows the account owner to make withdrawals or apply for loans over time. Often, because only the victim’s social security number is used to open the bank account, these identity theft cases go undetected until a special event triggers the detection of the event. For example, the victim may apply for social services and be denied due to excess income which was generated by the cake business crated with his social security number.
Synthetic ID theft impacts individuals who do not have established credit such as young adults in greater numbers because pieces of their personal information such as social security number can be combined with a fake name to easily open a new credit line and go undetected for a very long time. In this case, because only one piece of a real identity is used to commit fraud, the fraud detection systems as well as the identity theft victim face more challenges to effectively detect the crime.
In order to detect synthetic ID theft which uses only parts of someone’s identity, consumers must monitor all aspects of their identities and not rely on just one form of monitoring. For example, credit report monitoring alone may not detect all identity theft cases because medical reports or social security income may be impacted. Therefore, it is necessary to follow the following steps: