Cybercrime 101: How to Protect Yourself Against Synthetic Identity Fraud Scams

“Piecing Together” Frankenstein Fraud, the Fastest-Growing Identity Fraud to Impact Your Privacy

Halloween is a scary enough time of year without worrying about cybercrime and privacy scams. Synthetic fraud, or Frankenstein fraud — named after the character in Mary Shelley’s novel, Frankenstein — is when fraudsters pair real and fictitious customer data to create false identities, according to ASIS International. This is the fastest-growing type of identity fraud, estimated to cost banks $6 billion annually and poses significant harm to individuals if not prevented.

Synthetic identity fraud, according to the U.S. Federal Reserve, is the use of a combination of personally identifiable information (PII) to fabricate a person in order to commit a dishonest act for personal or financial gain. How it works is criminals piece together your data to create a Frankenstein identity utilizing stolen and real data from a variety of sources. Even if criminals don’t have all of your personal data, they can still use bits and pieces of information such as your name, date of birth, Social Security number, and other identifiers such as mailing address, phone number, email address to create a new identity to use to apply for credit cards, bank loans, auto loans, smartphone accounts, and more. It can take years to build up credit with this “Frankenstein identity.”

The Impact of Synthetic Identity Fraud

The impact to financial institutions is significant: synthetic identity fraud was responsible for 20% of credit losses in 2019 and that number continues to rise. Thieves often use this fictitious identity to scam government agencies to intercept tax returns and benefits payouts. Just this September, a widespread scam hit the California community college system, with more than 65,000 fake students applying for financial aid. The Los Angeles Times reported that the fraudulent applications were, fortunately, suspected in time because the college system had put additional security practices, including bot detection software, in place in July.

Synthetic identity fraud differs from traditional identity theft because criminals don’t steal an entire identity, they create one using a combination of real and fake information, explains the FBI. When this new identity is used to apply for credit, a new credit file is generated, making the fraud often difficult to detect. In the Security Intelligence article, Sue Poremba explains that fraudsters use this fake persona in two ways: a one-off use to get a credit card for a single large purchase or cash withdrawal or create a persona to get your tax refund. Or, to build up a high credit limit. When it reaches a peak, they go all-in on spending and not repaying.

Four Ways to Keep A Watchful Eye

There are steps consumers can take to protect their identities:

1. Leverage the power of your bank. Financial institutions have upped their synthetic fraud mitigation strategies and are taking steps to improve verification processes. For instance, they have two-factor authentication and may red flag or question the use of a new email address or phone number.
2. Opt-out of people search sites. If you don’t want to appear in these types of search sites, the easiest and most reliable way is to use a deletion service such as the ForgetMe feature included with IDX Privacy. ForgetMe continuously scans over 100 data broker websites and automatically removes personal profiles. If a profile is reposted, ForgetMe will find it and remove it again, as many times as it takes.
3. Monitor and scan for the bad stuff. The fact is, the information being sold on the dark web after a data breach is ideal fodder for thieves to piece together identities. Trillions of usernames, passwords, personal information, and confidential documents are for sale right now. Criminals purchase and use this data to steal your identity — or pieces of your identity. Check out how IDX CyberScan works.
4. Check your credit report. This is one of the best ways to protect yourself against identity theft and have a quick recovery if your identity is stolen. Read more about credit report basics: what you need to know about your credit report, how to review it, and how to use it to protect yourself against identity theft.

Children at High Risk for Synthetic Identity Fraud

Identity thieves are increasingly targeting children for synthetic identity theft. Thieves target children’s Social Security numbers because they typically have no credit history and their credit reports will likely remain unchecked for years. Additionally, children’s private data is often easy to access through social media profiles and school rosters. Even though the other information in the identity is fake, synthetic identity theft can affect a child’s financial future. Read more about the risks to minors here. What can parents do?

• Freeze your children’s credit. The FBI suggests freezing their children’s credit until they’re 16. Learn more about that here.

• Protect a child’s personal information as your own. As you fill out loads of forms on behalf of your child — from medical records to school enrollment — ask how the information will be used, how it will be kept safe, and whether you can opt-out on supplying sensitive information such as the Social Security number.

• ● Check your child’s credit record annually. In the case of synthetic identity theft, the fraud can go undetected for months because thieves tend to pick inactive SSNs (a child’s) where no one will be checking the credit report.

• Turn to identity monitoring. IDX Identity is identity protection that protects your identity and your family’s identity, in the event of any type of exposure.

Synthetic identity fraud sharply increased over the past decade, which is why you need to protect your identity — and your children’s identities. Scary times — even beyond the Halloween season — call for some proactive steps and help from the experts. The good news is there is good help to minimize and prevent these threats from affecting you and your “little monsters.”