What Is “Synthetic Identify Theft” and How Can It Impact Me?

“Synthetic identity theft” is when a fraudster combines real information about someone—such as a Social Security number—and information they’ve created about an entirely fake person. They then use these  “Frankenstein IDs” to commit theft. Some analysts have concluded that synthetic identity theft is the fastest-growing financial crime in the United States. At the same time, “Synthetic identity theft is one of the most difficult types of fraud to detect—and protect against.”

One challenge with detecting synthetic identity theft is that the victims don’t necessarily know that it has occurred because only a portion of their information is being used. It isn’t linked to the rest of their identity (e.g., their names). So the normal red flags won’t necessarily go off as quickly as they might otherwise.

Another issue is that traditional identity theft is usually committed in a short period. For example, someone might steal a credit card and then purchase items with it until the card has been discovered as compromised.

By contrast, synthetic identity thieves are much more sophisticated. Some even use artificial intelligence to create deep-fake personas and other credit profiles. They may take months—even years—to slowly establish real accounts, building credit for their false identity before they start stealing funds.

And they’re using these fake identities for more than just a shopping spree. They’re applying for government benefits, opening bank accounts to launder money from illegal enterprises, and more.

“Fraudsters typically wait three- to five years to ‘warehouse’ the stolen information before they start using it to apply for accounts. We expect a lot of the PIIs (personally identifiable information) that were stolen in early 2020, when the pandemic started, to surface in 2023-24,” said Carol Lu, an Alloy fraud analytics manager, in a recent interview.

Given that timeline, consumers should be asking credit bureaus for their credit reports, and then they should closely analyze the information for any errors or transactions they don’t recognize. Errors could result from a mixed file, blending two people’s reports, which is a problem on its own—but they could signal synthetic identity theft, a far more serious problem.

Consumers should also monitor the credit of others, such as children, who aren’t active financially. They can be a prime target for identity theft because they won’t have any competing transactions that will highlight the fraud.

If you see any issues on your credit report and suspect you’re the victim of identity theft, contact an attorney who specializes in these matters. Attorneys can help you repair your record. And they’ll help you receive compensation for the damage you’ve suffered due to reporting mistakes. Call today.