You might be wondering about privacy in our increasingly digital world. Maybe you've heard whispers of something called synthetic identity theft, but weren't quite sure what it was. With so many people going online, you are not alone with those types of concerns with the risk of synthetic identity theft.

As of April 2023, there were 5.18 billion internet users worldwide. Because of so much internet usage, there's been a disturbing rise in cases, leaving many businesses struggling.

Table of Contents:

• What is Synthetic Identity Theft?
  • How This Type of Fraud Works
  • The Many Uses of Fake IDs
  • Breaking Down the Damage of Synthetic ID Fraud
  • Why a Stolen SSN is So Bad
• How is Synthetic ID Theft different from Regular Identity Theft?
  • Synthetic Identity Fraud: How a New Fake Person is Born
• What's the Point of Synthetic Identity Theft?
  • Spotting the Trouble
• Ways to Protect Yourself From Synthetic Identity Theft
  • When You Think It's Happening to You
• FAQs about synthetic identity theft
  • What are the warning signs of synthetic identity theft?
  • How can you tell if someone is using a false identity?
  • What is a synthetic identity?
  • What is an example of digital identity theft?
• Conclusion

What is Synthetic Identity Theft?

Synthetic identity theft is a sophisticated form of fraud. Criminals combine real and fabricated information to create a fictitious identity.

This differs from traditional identity theft. The bad actors don't directly impersonate an existing person.

Instead, they concoct a completely new persona. This makes the identity theft much harder to detect and trace.

How This Type of Fraud Works

The process usually involves several stages. First, criminals get real personal data, like a Social Security number (SSN).

They might get this data through data breaches, phishing scams, or even the dark web. Then they add fake details, like made-up names or addresses, to create synthetic identities.

They might even "cultivate" these fake identities over time. They slowly build up a positive credit history, almost like tending a garden of deception.

The Many Uses of Fake IDs

These synthetic identities can be used for many fraudulent activities. The impact of identity theft might involve opening fake bank accounts or getting credit cards.

These fraudulent people might even use it to apply for government benefits. This type of fraud can harm many, including people, businesses, and government agencies.

Losses due to synthetic identity theft are expected to increase dramatically, totaling $5 billion dollars lost by organizations in 2024. A startling 46 percent of organizations reported facing this fraud in 2022, often involving a synthetic SSN in some capacity.

Breaking Down the Damage of Synthetic ID Fraud

The financial implications of this fraud are staggering. On average, a business with a write-off because of synthetic identity theft hits nearly $15,000 for that individual.

This has become one of the fastest-growing types of financial crimes. Losses are projected to keep increasing, reaching $23 billion globally by 2030, according to The Deloitte Center for Financial Services.

Part of the reason is the growth of things being bought and sold digitally that do not use cash.

Why a Stolen SSN is So Bad

Your SSN is a key piece of your identity, and there are steps to help fix it when stolen. When the Social Security Administration (SSA) thinks your social security number has been compromised, you will want to report it.

If criminals can link a real SSN to a fake identity, it adds false legitimacy. Many companies depend on that validation when trying to catch potential fraud.

How is Synthetic ID Theft different from Regular Identity Theft?

Regular identity theft means a bad guy takes all of someone's details and acts like they're them. With synthetic identity theft, they're mixing bits of real info, like maybe a Social Security number, with a lot of fake stuff, making up a whole new person that doesn't exist.

Think of regular identity theft as a copycat stealing a full outfit. Synthetic ID theft is like someone sewing a new costume from different bits and pieces, some stolen, some made up.

Synthetic Identity Fraud: How a New Fake Person is Born

It's scary how easy it is for these crooks to whip up these fake IDs. They snatch real info where they can and get a hold of personal info from data leaks.

With a little clever mix-and-match using that info with made-up details. And it gets worse – they might nurture these identities slowly, bit by bit, sometimes even creating a synthetic credit file.

What's the Point of Synthetic Identity Theft?

These phony identities serve all sorts of crooked schemes. A fraudster could use a synthetic identity to get credit cards or file for jobless benefits, but this also makes them a nightmare to trace. They have a blank canvas since this isn’t a “real” person they are using.

And it’s a slow burn type of crime. Small transactions happen first, followed by cashing in big over time as their trust grows.

Spotting the Trouble

Detecting synthetic identity theft is very challenging. Checking credit reports regularly could reveal weird activity that might have a link back to this. Consider using credit monitoring services to keep a close eye for suspicious activity.

AnnualCreditReport.com provides one free credit report annually. These official credit reporting agencies will spot if anything's amiss.

Check Social Security statements carefully. See if there is income listed that wasn't made and if so it could be an example of synthetic identity fraud. Contacting the Social Security Administration to fix it if needed.

Ways to Protect Yourself From Synthetic Identity Theft

Guard personal information carefully. Put a freeze on your credit and protect children too because sadly, identity theft happens to them too.

Freezing credit stops criminals from opening accounts. Consider the kids’ credit also, as there's a surprising level of child identity fraud with one of every nineteen kids victimized.

Here are a few simple, practical ways to protect you and your family:

• Lock down your Social Security number. Shred personal documents.
• Watch out for tricky phishing tricks. Be super careful about where you put your info, especially online.
• Be the boss of your own information. Be very private about who gets the goods.

Here's a summary of how to protect yourself:

Protection Method	Description
Security Freeze	Restricts access to your credit report, making it harder for criminals to open new accounts in your name.
Fraud Alert	Alerts businesses that they should verify your identity before opening any new accounts.
Monitor Credit Reports	Regularly review credit reports to check for suspicious activity or accounts that weren't authorized.
Protect your SSN	Don't provide your SSN unnecessarily, and only do it on trusted websites or verified communications.

When You Think It's Happening to You

If it looks like your information has created an alternate identity, then action needs to be taken immediately. There could be major problems with credit or cause some stress. Report the identity theft to each credit agency immediately and tell them to stop it.

Go to the police. It gives you a document showing that the information had theft that happened.

Companies and banks should be contacted to report theft happened. Close existing accounts and check your accounts carefully for things you did not setup or buy. You should also be on the lookout for a denied credit application for no apparent reason.

Getting help with credit reports is important to correct things. The Federal Trade Commission (FTC) takes identity theft claims that you submit, including stolen information that could involve the compromise of a Social Security number.

FAQs about synthetic identity theft

What are the warning signs of synthetic identity theft?

Watch out for unfamiliar accounts on your credit report. Unexpected mail addressed to unknown people at your home could be a sign, or even a phone number you don't recognize showing up on your caller ID.

How can you tell if someone is using a false identity?

It is hard to detect on your own, but it is possible that you applied for a personal loan and you were turned down even though your credit should have qualified you. Synthetic identities combine real and fake information.

Checking your credit and staying aware of your financial activities gives some possible chance to tell, however. Financial services may alert you, but that would only be after something occurred.

What is a synthetic identity?

A fake persona created by mixing real information, like a Social Security number, with fabricated details. No actual individual is involved.

What is an example of digital identity theft?

Digital identity theft can be if someone hacks your email or a social media account. Synthetic ID theft involves a completely fictitious, non-existent person built from mixed-and-matched real and fake info, such as synthetic identity fraud examples from 2022.

Conclusion

We live in a world of constant online connection. The bad thing is that our personal information faces very serious risk in different ways. Understanding what synthetic identity theft means helps stay safer and avoid having a synthetic identity created in your name.

Fraud might continue to increase. We have to remain vigilant and put the needed protections around our details. Taking some action is smart defense for preventing synthetic identity fraud.