Most people believe that identity theft involves theft of your whole identity. A thief comes along and steals your name, date of birth, Social Security number, and other private data, and then uses it to apply for credit cards in your name or commit other forms of fraud.
If only it were so simple. These days, that’s a decidedly old-school method of identity theft. Far more common is synthetic identity fraud, in which criminals don’t need to collect all your personal data. Instead, they create what some have called an identity Frankenstein, piecing together stolen and real data from a variety of sources to create a fictitious or synthetic identity.
This means that if you’ve had your Social Security number stolen—as 7 million people did last year alone—criminals may be using it as part of their fraudulent schemes. The same is true of your name, date of birth, and other personal information. Even if criminals don’t have all your data, they can still use bits and pieces to create a synthetic identity with which they can apply for credit cards, bank loans, smartphone accounts, tax refunds, and more.
The Federal Trade Commission calls synthetic identity theft the “fastest growing type of ID fraud,” and cites a study that found synthetic identity fraud accounts for up to 85 percent of all identity theft.
Perhaps most frightening is that identity thieves are increasingly targeting children—possibly at an even higher rate than the adult population. That’s in part because children’s private data is often easy to access through social media profiles and school rosters. Plus, the identity theft is unlikely to be noticed for a while—until offers start pouring in for pre-approved credit cards or a debt collector knocks on the door.
Financial institutions are being hit hard by synthetic identity fraud, and they’re taking steps to improve the verification process for new accounts. For instance, they can use data to identify red flags—like use of a new email address—among account applicants.
As for the rest of us, we should defend ourselves against this new form of identity theft in many of the same ways that the government and others have long advocated. That means everything from creating complex passwords to ordering a free credit report every four months.
With synthetic identity theft on the rise, it’s also time that we set aside the notion that we’re safe so long as criminals don’t have all our personal data. Unfortunately, that’s no longer true.