Synthetic ID theft is a growing problem in 2018.
But what, exactly, is a synthetic ID, and what is synthetic identity theft?
Synthetic ID theft defined
The issue seems somewhat parallel to the headlines about synthetic marijuana that has had severe consequences in the United States.
It can look like marijuana and has an effect similar to marijuana, but it's difficult to spot what you're actually getting if you buy it. The ingredients involved can vary tremendously.
When it comes to a synthetic ID, cybercriminals also have a long list of potential ingredients they can piece together to create what looks like a real identity and has the impact of a real identity.
Especially when we're talking about the power to open accounts and charge on them.
Here is an example of how it works.
Instead of stealing your complete identity, ID thieves are creating a new one piece by piece. They will use a real Social Security number (like yours), someone else's real address, and a third person's real name.
It's almost like the perfect crime: Synthetic identity thieves go shopping on these identities that are made of real elements but are not, as a whole,
When banks detect these they cannot call the cardholder and say, "We've noticed some large purchases on your account, is this you?" because there is no "you" for them to contact.
American Banker paints the picture like this:
"There is usually no individual victim and no reported fraud; the primary victims are financial institutions. A credit card account created with a synthetic ID, in which the card gets used but the bill never paid, usually makes for a mysterious charge-off for the bank. Attempts to collect fail."
According to credit agency TransUnion, "Suspected synthetic fraud balances rose 5.2% between the fourth quarter of 2016 when it was $276 million, and the fourth quarter of 2017, when it was $290 million."
And the problem is becoming so significant, credit reporting agency Equifax announced a new product, aimed at banks, to help spot synthetic identities and stop this type of ID theft.
According to Ken Allen, Senior VP of Identity and Fraud at Equifax, “FraudIQ Synthetic ID Alerts were designed to help combat synthetic ID fraud with insights that detect linkages and suspicious patterns, in order to determine if the applicant is a real person.”
Do you remember the 1990s when ID thieves used to simply find a receipt in the trashcan and then use that number to buy something? We can see now that those "were the good old days" of identity theft.