Identity theft and identity fraud have been significant concerns among consumers for many years, especially as the internet has made it easier than ever for criminals to purchase unsuspecting victims’ financial credentials on the “black market.”
If you weren’t already worried enough about protecting your identity, there’s a new form of identity fraud online – and it’s becoming an increasingly serious threat. Known as synthetic identity fraud, this threat can have devastating consequences for its victims.
Below, we’re taking a closer look at synthetic identity fraud and how to protect yourself.
What Is Synthetic Identity Fraud?
Synthetic identity fraud occurs when a combination of real and fake personal information is used to open financial accounts. For example, someone committing synthetic identity fraud may use a victim’s real Social Security Number (SSN) to open an account along with made-up credentials, such as fake names and contact information.
Compared to “traditional” identity theft, identity fraud can be more difficult for financial institutions (and victims) to detect in a timely manner because of the false information used. Meanwhile, many criminals carrying out synthetic identity fraud may even utilize the accounts they’ve opened responsibly for several months to avoid drawing attention to themselves.
The Dangers of Synthetic Identity Fraud
Synthetic identity fraud can have far-reaching consequences for its victims. Because it may take months or even years for a victim of synthetic identity fraud to learn about fraudulent accounts, a lot of damage can be done. According to the Federal Reserve System, synthetic identity fraud is the nation’s fastest-growing financial crime, costing billions of dollars in damage each year. On average, victims of this type of fraud will experience losses of $15,000 or more before the activity is even detected.
Why Is Synthetic Identity Fraud on the Rise?
There are many factors that analysts believe are contributing to an increase in synthetic identity fraud cases. First, and perhaps most notably, creditors have loosened their standards for processing applications and opening new accounts. As a result, it’s become easier for criminals to create accounts using stolen and fake credentials. Likewise, an increase in awareness of traditional identity theft has forced criminals to get more “creative” with their theft.
How to Keep Your Information Safe
So, what can you do as a consumer to prevent identity fraud? Start by checking your credit report regularly to look for signs of fraudulent activity. If you ever notice a new account or charge that you did not authorize, it’s time to investigate. You might also consider placing a freeze on your credit report, which will prevent new accounts from being opened in your name without additional steps being taken on your part. Of course, you should also take precautions online and be mindful of where you provide sensitive information (like financial data or your Social Security Number).
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