“Synthetic Identity Theft” now makes up 80% of all ID thefts in the country at this time. Never heard of it? A lot of people haven’t. What is it? A thief takes one piece of your true identity (usually a social security number) and then combines it with false information such as a different name, address, etc. What makes it so dangerous? The biggest victims are children because for years their social security numbers are inactive until they start to establish credit. It is also the hardest identity theft to detect.
There are two main ways these kinds of identity thieves will go about establishing “synthetic identities.” The first is by applying for credit. Once the thief has obtained a SSN and created a false name etc., they then apply for credit. Since the child has no credit when they apply they will at first be declined. However they will now have a credit file because of the inquiry. From there they will apply for one or two more cards. Now that they have a credit file some creditors will extend credit cards with small credit limits to the person. The thief will then make purchases and payments for several months to establish a good credit profile. Once they’ve established a good credit history they will then apply for more credit cards with higher limits, start maxing them out, and not making payments. This avenue takes a while since it takes time to establish a credit history but when a child’s social is used they have the luxury of time since it may be years before that child reaches an age where they are going to try to establish their own credit.
How does a thief acquire a minor’s social? There are unfortunately many ways: Hospital records, day care records, school records, library cards…the list goes on and on.
Another way they will establish a “synthetic identity” is by utilizing authorized user accounts. This is faster than by trying to establish credit up front and waiting for a period of time for the accounts to age. They will use a service to be added to an existing cardholder’s account as an authorized user. The cardholder gets paid to have the authorized user added to their account, even if it’s just for a few days. And the person who is added never actually receives a credit card. But that few days is long enough for the fraudster to have created a credit profile with the cards that they have been added on. The fraudster can then go out and apply for their own credit. Once they have their own credit they run up large amounts of debt usually by purchasing things that can be turned around and sold, such as electronics.
There are several reasons that this sort of identity theft is hard to detect. If it is a child’s social security number that has been compromised, it could be years before it is discovered since, depending on the child’s age, they will probably not start applying for their own credit until they are around 18. Also since a false name, address and date of birth are used it can be very hard to track down.
While there are many ways to try to prevent identity theft, there are unfortunately none that are fool proof. And when it comes to a child it gets even harder since they have not yet established a credit profile. In order to try to monitor your child’s credit, it is a good idea to go to annualcreditreport.com yearly to see if a credit report pulls up for them. If nothing come up that’s a good sign. If it does then that’s evidence that the child’s social has been used and requires further investigation. While the majority of these thefts are done using a minor’s social, it is certainly not limited to just children. It is a good idea to monitor your credit file regularly to look for anything out of the ordinary. With theft like “synthetic” identity theft on the rise it’s always better to be diligent and better safe than sorry.