Today, synthetic identity theft is one of the fastest-growing financial crimes all over the world. Research has shown that more than 20% of credit losses in the United States are hinged on this fraudulent act, which has cost lenders more than $6 billion yearly. Various means have been set to resolve synthetic fraud. But preventing it has been extremely difficult. The reason is that unlike the common everyday theft, which could be traced back to the offender, synthetic theft entails the falsification of one’s identity.
With billions of people being victimized and at the risk of debts through synthetic theft, it becomes necessary for every individual to practice some safe methods that will help guard against financial crimes. But, how do you go about this? First thing’s first, You need to understand the concept behind synthetic identity theft to help you develop effective preventive measures.
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What is Synthetic Identity?
Synthetic Identity is nothing but creating a fake identity to implement illegal activities. They create the identities with the combination of fabricated credentials. These are not at all associated with the real person. Synthetic identity is created by integrating false personally identifiable information (PII) with correct social security numbers (SSN). As the Synthetic identity is created by the combination of both real and fake information, it is very difficult to track.
What is Synthetic Identity Deception?
Synthetic Identity Deception is stealing information or credit by creating a new identity from the combination of fake and real identities. Firstly, they start collecting the social security numbers (SSNs) from many illegal sources and create a fake identity to that stolen information and transform it into a new identity. Using that identity, they start looting the money. They focus on the Weakness of the online banking sectors and implement their developed techniques. In recent times, this mode of deception is a very actively growing modern financial crime all over the world.
How to Create Synthetic Identity?
Mainly, the fraudsters use two methods to create a synthetic Identity, namely Manipulated Synthetics and Manufactured Synthetics.
In this method, real identities are used by making minimal modifications to the Social Security Numbers (SSN) and other related elements. Mostly, this method is used to hide the previous transaction history and attain access to credit to attempt illegal activities or any other activities. They may also use this method to clear/hide their bad credit history that is meant to pay back and use their new credit on further purchases. These are more likely to get detected. Mostly, manipulated synthetics are identified at the time of providing valid checks.
Basically, synthetic identities are the combination of a lot of fake, real identities. They use the information of real people to create a new fake identity for their activities. The fraudsters are more likely to use the invalid information that includes the name, SSN by choosing similar numbers as issued by SSA. These newly created identities do not belong to any real and known customers. As they use the Social Security Numbers (SSN) issued by the SSA, it is very hard to identify the Manufacturing Synthetics identities.
What is Synthetic identity theft?
To fully understand the concept of synthetic fraud, you need to note that this activity is done consciously and without any thought of what the law would hold for anyone who falls prey. Likewise, no sector or individual is immune to identity theft.
The United States Department of Justice has determined synthetic identity theft to mean a fraud that occurs when criminals use made-up information to falsify their identity in order to commit fraudulent acts. What this means is that when a person engages in this type of fraud, fictitious information is used to hide their identity and escape from criminal charges.
But, to achieve this, identity thieves often take an individual’s real data, like their Social Security Number, and pair them with a falsified statement, such as Name, Address, Date of Birth, and many more to create an entirely new identity. When your real Social Security Number is used, it leaves you as a core suspect in fraudulent acts and you may end up paying for a crime you never committed. But, how do these identity thieves spot their prey?
- Related: 8 Ways that you can prevent hacking
The Expert-Level Fraudsters At Work: How an Identity thief Spots Their Victim
Studies have shown that identity thieves seek to exploit people who do not frequently use their credit cards. Apart from this, they explore various means like phishing, stealing mails, and hacking of online accounts. Regardless of whatever means they use, the point is that they obtain the sensitive information they need. Then, they look for weaknesses within the real data.
In most cases, identity thieves tend to look for a thin account owned by a minor. This is because opening a new account with their data will be easy as they have lower chances of real security checks. Moreover, the minor does not actively use the credit card. So, imagine the attacker lands with your social security number and other sensitive data, the person can easily:
- falsify other minor pieces of information and apply for a credit card which the credit report bureaus may not be able to turn down, as they did provide the accurate Social Security Number and full name.
- take advantage of card privileges or authorized user features to create wealth by buying valuable items or applying for more credit cards.
- forge credit reports to credit bureaus in order to defraud companies. When they achieve this, they demand compensation from the insurance companies and use the credit cards to cash out their illegally gained income.
How Do I Avoid Synthetic Identity Theft?
The good news is that there are various tried and tested means that you can practice protecting yourself from identity theft. To minimize the risk, consider the following:
Keep Sensitive Information Safely Locked
In a case when you are asked to fill a form, and you find there is a slot to fill in your Social Security Number, ask questions before inputting your data. You want to make sure that it is an absolute necessity. If you do not get a definite answer from the person or organization, keep it locked and never provide the data.
Observe Your Credit History
Identity thieves can abuse your credit history without you knowing. So, you’d want to regularly keep an eye on all transactions you make. Check if you recognize the transaction made with your card and the available credit balance. If you notice any suspicious activities on your credit card, call your financial institution immediately.
Check Your Social Security Statement Yearly
Every year, make sure to cross-reference your Social Security Statement and pay up debts to ensure a balanced account.
Monitor Minor’s Account Till They are of Legal Age
Another efficient method to prevent synthetic identity theft is to freeze your child’s account until they can legally operate the credit card. Although, not all states allow this means. You’d want to check if your state allows this before doing so.
Shred Documents With Sensitive Information
Make sure to shred papers you no longer need but which contain sensitive information. To do this, carefully go through your library, files, and computer and destroy anything you deem fit to be exploitable.
Keep Personal Records in a Safe Place
Today, technological advancements have made it easy for identity thieves to access data using digital means and even physical copies. You want to store your sensitive documents like birth certificates, passports, and social security cards in a safe place.
Get a Reliable System to Deposit your Private Documents
Technological innovations like IP addresses, Biometrics, and Geolocations are other useful means to safeguard your personal information. These devices act as security keys and only grant access to the real owner as long your documents are encrypted in them.
This process analyses other identities that might hold the same data. Then, it spots any suspicious activities and immediately locks your data to keep it safe.
The fact is that synthetic identity theft can be dangerous for everybody especially business owners. This is why making use of personal identity verification means that will help you spot suspicious activities on your credit are necessary, as it’s the strongest defense mechanism to keep your cash safe.
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