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Sign-InThe first noted scam dates back to 300 BC, after two sea merchants sunk a ship full of cargo to avoid selling their products and instead claim the insurance money. Through time and with advancing technologies, scams are still relevant in today's society and continue to evolve with civilization. For example, synthetic identity theft is a scam based on the use illegal use of someone's private financial data, like their social security number, combined with other falsified personal details to create a new identity.
Synthetic identity fraud is more difficult to detect when using fraud monitoring systems. It usually targets individuals who infrequently use their credit, like children and older adults, and some cases have even involved homeless individuals.
How does it start?
Unfortunately, Social Security numbers (SSNs) are relatively easy to obtain. Individuals, via the dark web, can purchase stolen SSNs. Others might access someone's SSNs by stealing wallets or creating fake job posts that require applicants to prove their identity by submitting a copy of their Social Security cards. Once the scammer takes possession of the SSN, they will slightly alter the rest of this new identity to create a new person, also known as a synthetic identity.
What can you do with synthetic identity?
Most synthetic identities are used for financial gain. For example, individuals can apply for loans, credit cards, and other financial services by creating a synthetic identity. This scheme involves carefully constructing a credit history that appears legitimate, often requiring significant effort and time investment on the part of the scammers.
What's the purpose?
You may be thinking, "What is the purpose of building synthetic identity if it takes just as much time to build fake credit as it would take to build up your credit?" Unlike applying for credit in your name with the promise to pay it back, these scammers do not intend to repay any loans or credit cards. Instead, they take as much money as possible to use these synthetic identities and then default on the loan. When the lender attempts to collect a payment, they discover they are dealing with a synthetic account and will most likely have to submit an insurance claim based on the experience.
What if you become a victim?
Synthetic identity is hard to detect. Frequently, lenders don't catch synthetic accounts because of how real they appear. If you are a victim of synthetic identity fraud, your credit will become a split or fragmented credit file. It would help to work with different bureaus to dispute what appears on your credit.
Tip: Failing to monitor your credit can have detrimental consequences for your credit history. Keep an eye on your credit reports for any signs of fraudulent activity.
How to avoid synthetic identity theft
It's essential to secure your SSN; avoid traveling with it printed on documentation or saved on devices. Always blackout or shred essential documents that may include your personal information before discarding them. Phishing scams (including a hyperlink that connects this to a phishing article) are some of the best ways hackers steal personal information. So be sure to watch for phishing emails and texts. Also, always keep an eye on your credit report. Monitoring your credit can help you find any fraud before it hurts your credit too much.
Regularly monitoring your credit is an effective way to detect and address any fraudulent activity before it significantly impacts your credit score. You can quickly identify any suspicious accounts or transactions by closely monitoring your credit reports, which can be obtained for free from major credit bureaus.
If you suspect identity theft, visit IdentityTheft.gov to report the crime.