Synthetic Identity Theft And Why This Type of Fraud is So Hard to Fix

While many people have likely heard of identity theft, there’s a chance they might not know about synthetic identity theft.

Straight identity theft is where a criminal steals your real information, your name, Social Security number, address and assumes your identity. Alternatively, synthetic identity theft combines real information, like a person’s Social Security number, with fabricated information, such as a fake name or address, to create a new, synthetic persona.

“Since synthetic identity theft and fraud uses only some of your actual personal credentials, the fraud does not always show up on your credit bureau report,” writes Mark Pribish of Merchant Information Solutions, Inc. in this story published on “Conversely, if negative information is attached to another file that is linked to your credit bureau report file, this can negatively impact your credit report and credit score.”

This type of theft/fraud is even harder for credit bureaus to detect since the information is not an exact match, Pribish continues.

“Credit bureaus respond to a high volume of mistakes and other incorrect information due to typos, name changes and similar names every day. ID-theft criminals know this and exploit the weakness,” he writes.

There are two common types of synthetic identity theft criminals. One will sign up for services without planning to pay for anything.

Alternatively, the second one will sign up and behave themselves for some time, their patience results in a bigger take. They wait for their credit limits to increase as much as possible before they max them out and disappear.

“They open accounts at different organizations, check their credit scores regularly, and choose the perfect time to exploit the accounts to the maximum degree possible,” according to this Equifax white paper. “In the aftermath, financial-services organizations are generally left with a significant loss and nobody to chase in their collection and recovery process.”

The white paper details a massive synthetic ID fraud scheme where more than 7,000 false identities were created to obtain more than 25,000 credit cards. The criminals diligently provided false creditworthiness info in order to boost the credit of each identity. The fraudsters went so far as to maintain 1,800 drop addresses used as the mailing addresses of the false identities.

The goal was “to get credit cards, get the credit limits as high as possible, then use those credit limits to max them out, and then walk away, said U.S. Attorney Paul J. Fishman. “A lot of what they did was very painstaking and very sophisticated and took a long time.”

In the end, there were real losses of $200 million before the FBI shut down the crime ring and charged 18 people with bank fraud.


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Image: Pixabay