Synthetic identity theft, or synthetic identity fraud, occurs when a criminal creates an identity instead of stealing an existing one. The scam involves mixing real Social Security numbers, or fake numbers, with other pieces of information—names, addresses, and birthdates—to put together an entirely new identity, often using partially fake identity information. In contrast, the more familiar form of identity theft involves using the actual name, Social Security number, and other personal data of a single victim.

Synthetic identity theft is significant

Banks spend a lot of time and money each year trying to track down synthetic identity thieves. However, it gets tricky as they are chasing people who don’t exist. In reviewing credit histories in connection with credit applications, the big three credit bureaus (Experian, Transunion, and Equifax) frequently deal with all sorts of information that may not quite align exactly with the information in their files. This could be a result of typographical errors, name changes, relocations, misspellings, or other issues. Identity thieves seek to exploit these weaknesses to create fake identities and open fraudulent bank accounts and much more.

According to Bloomberg News, synthetic identity thieves place the most value on the Social Security numbers of people who don’t use credit, including infants and children. When using a synthetic identity to apply for credit cards, the thief is often turned down at first, because there’s no credit history file associated with the identity. That’s why using a child’s identity is tempting for scammers. The inquiry generates placeholder profiles with a credit bureau, and thieves keep applying until a lender finally opens an account. That’s when it becomes synthetic identity fraud.

Who’s the victim of synthetic identity theft?

Here’s where the crime gets even more interesting. Since synthetic identity theft has no specific consumer victim, it can continue undetected for months, until the identity thief uses up the remainder of the credit line, leaving the lender, bank, or other financial institution holding the bag.

Synthetic identities can also be used to obtain employment, to file fake tax returns, to get medical care, or for other fraudulent purposes. And if an identity thief uses your real Social Security number to create a fictitious identity, the crime could come back to haunt you, potentially affecting your credit score and making new credit lines difficult to open. Yes, the rest of the information may not be yours, but that is your Social Security number, an important piece of personally identifiable information, after all.

How to help protect yourself against synthetic identity theft

Is there anything you can do to help protect yourself? Well, you don’t want your Social Security number falling into the hands of an identity thief.

• Keep your Social Security card and any documents that contain the number safe and secure. Before discarding any documents containing your personal information, be sure to shred them. The same goes for bank account, credit card, and tax statements.
• Beware of phishing attempts—by phone, email, or text—to trick you into sharing your Social Security number and other personal information.

Given the number of data breaches that have exposed the Social Security numbers of tens of millions of U.S. consumers, your personally identifying information may already be out there. So, keep an eye out for activity that may indicate a synthetic identity thief is using it:

• Monitor your credit reports for activity that’s not yours. You can do this at AnnualCreditReport.com, where you’re allowed to access one free credit report each year from each of the three major credit reporting agencies. By accessing a different report every four months, you can track your activity at no charge at different points over the course of a year. Given the value placed on minors’ Social Security numbers, check your children’s credit reports, as well. If you see unfamiliar activity, contact the credit agency. 
• Review your annual Social Security statement. Since a fraudster might use a synthetic identity to obtain employment, it’s possible their income could show up on your statement. You want to make sure the amount on your statement aligns with what you know your income to be. If it doesn’t, contact the Social Security Administration.
• Watch your mail. Be on the lookout for mail sent to your address in someone else’s name. This could be a sign that creditors are trying to reach the thief—and your home address is mingled with information the identity thief has cobbled together.