Synthetic Identity Theft: What You Need To Know To Protect Yourself

Every day, thousands of data brokers work hard to aggregate public data and make our personal details accessible to malicious actors. 

Synthetic identity theft is a form of identity theft that involves creating fake identities or using legitimate information to establish new accounts. Criminals use your personal information to create entirely new identities by combining different pieces of data from multiple people. They could also use these fake identities to take out loans or secure credit cards without the knowledge or consent of those affected by their actions.

This type of identity fraud can affect anyone and every industry. Read on to learn more about this type of identity theft, how it occurs, and how an identity protection service can prevent it from happening to you.

How common is synthetic identity theft?

Identity theft is one of the most common crimes that individuals face today. As of 2024, Americans lost $12.5 billion to fraud. While the number of reports stayed consistent from the year prior, victims of identity theft and fraud have reported higher losses than ever, with an increase of 25%.[1]

While synthetic ID theft has become more common, this form of ID fraud is still more complicated for law enforcement officials to track down the perpetrators. This is because criminals are stealing information from multiple people to create an entirely new persona from scratch.

This type of fraud is frequently used in conjunction with other forms of identity theft, such as credit card fraud, loan fraud, food stamp fraud, tax fraud, or medical identity theft. Sometimes, people with a poor credit history will use a synthetic identity to apply for a loan or other line of credit.

How are synthetic identities created?

Most thieves who commit synthetic ID theft create an artificial identity to facilitate financial crimes. Often, these synthetic identities use information from a real person's identity or the identities of multiple people.

This is because criminals need legitimate data, such as valid Social Security numbers (SSNs), addresses, phone numbers, and other personally identifiable information (PII), to open new accounts, receive funds, or make purchases.

Synthetic identity thieves often use the internet, data breaches, or the dark web to access databases containing personal information about consumers. The data they steal to create these identities can come from a living person, a deceased person, a child, or a combination of all these sources. Criminals then take the information they source and create a manipulated or manufactured synthetic identity.

Manipulated synthetic identities

Manipulated synthetic identities are created based on a person's real identity. Criminals make a new identity using real and fake information from a person, such as their stolen credit card numbers, date of birth, and Social Security number, to establish this new persona.

Often, fraudsters alter some of the information, such as the name or address, to deceive banks and prevent government institutions from flagging any recent activity associated with that name or Social Security number as potential fraud.

Manufactured synthetic identities

Manufactured synthetic identities are created by assembling valid data from multiple sources to form a new synthetic identity. Criminals can create an entire fraudulent persona with little more than a Google search, legitimate personal information, and basic knowledge about a person.

The more complete the information on a manufactured synthetic identity profile is, the easier it is for thieves to open new accounts. Since many of these manufactured identities are often composed of entirely legitimate information from multiple individuals, they may pass through security checks without raising any red flags. This is especially common during one-time transactions.

Once criminals have created their false synthetic identities, they use this information to generate realistic-looking documents designed to fool financial or government officials. They will often use the synthetic identity for criminal activities such as fraudulently obtaining financial services, government benefits like Medicaid or food stamps, applying for student loans, or even applying for jobs using one of these made-up personas.

How to prevent synthetic identity theft

Although synthetic identity theft can be challenging to detect, there are measures you can take to protect yourself from and prevent this type of theft. Below are some of the best safety measures you can take online and offline.

1. Secure your Social Security card

Securing your Social Security card is more important than ever. Once thieves have it, they can use it to open any new accounts or conduct any activity that would require verifying your identity.

It is ideal to keep your Social Security card in a secure location in your home, out of public view. Additionally, it is best practice not to provide your Social Security number (SSN) unless it is absolutely necessary.

If your SSN becomes compromised, you can report a stolen Social Security number to your local police and file a fraud alert with the three credit bureaus, Equifax, Experian, and TransUnion. You can also request a new SSN from the Social Security Administration.

2. Avoid phishing scams

Phishing scams happen when a scammer sends you an email that appears to be from someone or a company you recognize. These emails often contain links to malicious websites or attachments that can give hackers access to your personal data and your computer.

If you receive an email requesting personal information, such as a credit card number or Social Security number, please disregard it. The best way to avoid phishing attempts is to not click on any links in suspicious emails, even if they appear legitimate.

3. Check your bank statements and bills

Regularly monitoring your bank accounts, credit cards, and other financial accounts can help prevent synthetic ID theft and is a good tactic for overall fraud prevention.

Browse your statements and bills to ensure there isn't any unusual activity on your accounts. If you notice a discrepancy, please contact your provider or bank as soon as possible to resolve the issue.

4. Monitor your credit reports

Keeping track of the activity, accounts, and information on your credit report can be key to preventing identity theft.

You can get a free online credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) from AnnualCreditReport.com. Reviewing the information on these reports can be key to protecting yourself from theft. You can request your free online report weekly.

5. Freeze your credit

If you encounter any suspicious activity or information on your credit report, you can request that all three credit bureaus freeze your file. You can also contact your bank and credit card companies to have your account frozen from any new transactions if you feel you have been a victim of theft.

Many credit card companies also allow you to freeze the card directly through your account access page. This can be especially important if you have an account that you haven't used in some time. You can also freeze the card while it’s not in use to ensure no suspicious activity occurs until you intend to use the card regularly.

6. Stay safe online

Staying safe online is more important than ever, and the best way to protect your PII from bad actors is to follow best practices. Hackers are in the business of stealing data and tricking unsuspecting users into providing their information.

Aim for less is more with browsing online more anonymously. Refrain from posting too much identifiable information online and on social media sites.

It is best to use complex passwords that are difficult to crack and not share them with others. You can use password manager software to help you keep your passwords protected and safe from cybercriminals. Additionally, utilizing two-factor or multi-factor authentication can help protect your data and accounts from unauthorized access.

7. Use identity theft protection software

To prevent and minimize the risk of damage from identity theft, consider using a credit monitoring service to alert you if your identity is compromised.

Credit monitoring services track all of your accounts and notify you when they detect any suspicious activity on any of them. You can also install software that monitors all of your accounts for fraudulent activity, including social media accounts. Many software programs today also scan and remove your information from the dark web if it is found.

Some of the best identity theft protection software includes:

4 signs of synthetic identity theft

Synthetic identity fraud can be challenging to catch for both consumers and organizations. It can be especially tough to detect when criminals use a manufactured synthetic identity to commit fraud.

However, there are several ways to check for ID theft. Here are signs that synthetic identity theft may be happening to you:

1. There's conflicting information on your credit report

For example, suppose you receive a statement for an account you do not recognize, and the information on the statement differs slightly from yours. This could mean all or a portion of your PII was likely used to create a false identity to steal financial services from banks. 

Aim to check your credit report at least every few months to help prevent identity theft. 

2. You receive a notification for accounts you didn’t open

Criminals often add victims as authorized users on credit card accounts to inflate the credit score of a fake identity, to increase the likelihood of receiving funding from new credit or loan applications they submit.

3. There’s new activity on a previously unused account

This activity may include a request for a significant credit line increase or payment history from an unknown bank account. Bad actors often attempt to use the account or card first to confirm it is still valid, then steal the funds or boost the credit file to facilitate further identity theft.

4. There’s unusual activity on your bank accounts or credit reports

This can include receiving credit card bills that are much higher than usual, or getting a notice from a creditor or debt collector for a debt you don’t recognize.

FAQs

Bottom line

Cybercriminals are continually devising new methods to steal your information and evade detection. Synthetic identity theft has become one of the most common ways they conduct identity theft. We must become more vigilant in protecting our data than ever before.

If you believe you have been a victim of this type of theft, you are not alone. Reporting it to your financial institutions and the authorities is crucial to preventing further damage. You can also contact your identity theft remediation specialist to help mitigate the financial losses and restore your identity.