New Year, New You? The Unfortunate Truth about Synthetic Identity Fraud

This new year, you may have resolved to make a change in your life. Maybe you’ve even gone so far as pledging to become a “new you” in 2020. But someone may have already claimed that “new you,” stealing your credentials and using them to create a new identity.

Identity theft is a growing problem, resulting in millions of dollars in damage around the world. And now, there is a modern twist to this old and costly problem: synthetic identity fraud.

What is it?

According to the Government Accountability Office (GAO), synthetic identity fraud is “a crime in which perpetrators combine real and/or fictitious information, such as Social Security numbers and names, to create identities with which they may defraud financial institutions, government agencies, or individuals.”

McKinsey & Company estimates that synthetic identity fraud is the fastest-growing type of financial crime in the United States. Between 2017 and 2018, the volume of personally identifiable information (PII) exposed in data breaches increased by 126 percent, with more than 446 million records exposed. It’s clear that using fictitious identities to commit fraud is quickly gaining traction and has the potential to greatly affect the financial industry.

“Although it’s difficult to establish statistics, synthetic fraud may account for five percent of uncollected debt and up to 20 percent of credit losses, as much $6 billion in 2017,” says Sue Landauer, a certified public accountant with the Forensic Accounting Service.

As for its victims, synthetic identity fraud typically targets children, the elderly or the homeless. In fact, one million children fell victim to identity fraud in 2017.

How can synthetic identity fraud be identified?

Although recognizing this type of fraud can be somewhat challenging, the Federal Reserve suggests looking for these common characteristics:

• Multiple identities with the same social security number
• Credit file depth inconsistent with customer profile
• Social security numbers issued after 2011
• Multiple authorized users on the same account
• Addresses near large international airports or shipping areas
• Multiple applicants with the same address or phone number
• Use of secured credit lines to build credit
• Multiple accounts from the same IP address

How can you protect yourself?

Here are five simple ways to make it harder for a thief to steal your personal information:

1. Shred documents containing personal information
2. Only provide your social security number to businesses when absolutely necessary
3. Monitor credit and identity usage
4. Freeze your credit account as well as those of any of your minor children
5. Check accounts regularly to ensure legitimacy

In today’s ever-changing digital environment, shielding yourself from synthetic identity fraud is important, both personally and professionally. Education and awareness are the best lines of defense when it comes to protecting yourself, and your credit union.

It starts with exercising extreme caution with personal information and training employees to look for the common characteristics of synthetic identity fraud, like multiple identities with the same social security number, or the use of secured credit lines to build credit. From a personal standpoint, be smart online – even with the information you share on Facebook and other social networking sites. And finally, always shred documents containing personal information.