Protecting yourself against synthetic identity theft

More than 12 million Americans became victims of identity theft in 2014, representing a new victim every two seconds and costing consumers $16 billion, according to Javelin’s 2015 Identity Fraud Study. The most prevalent form of identity theft is synthetic identity theft, which rose at a rate of 125.9 percent between 2010 and 2013 and accounts for 88.3 percent of all identity fraud, according to ID Analytics. Here are some things you need to know in order to protect yourself against this increasingly common form of cyber crime.

How Synthetic Identity Theft Works

Synthetic identity theft is the fastest-growing type of ID fraud, CBS Los Angeles reports. It is so called because it involves synthesizing real credentials with fake information in order to create a new, phony ID. For example, many thieves begin by using a real Social Security Number. This can then be combined with a different name, address, and phone number to create the new identity. Using this synthetic identity, the thief may then begin exploiting the credit process in one of three ways.

Phony Credit Applications. In one common scam, the thief begins applying for credit under his or her new name. The first credit application will be turned down because no previous information for the new identity exists, but a new credit file will be opened with the three major credit bureaus. The next time the thief applies for credit, their new file will appear on record. Thieves first approach card issuers that offer low lines of credit such as $300 to $500 to applicants without credit history. They then use this to begin building a credit history so they can apply for cards with bigger credits lines as well as loans. Perpetrators of this scam often use Social Security Numbers stolen from small children, who will not notice the frauds being perpetrated with their identity until after they turn 18 and begin applying for credit themselves.

Adding Authorized Users. Building a phony credit history this way takes time, so thieves have also developed more efficient variations of synthetic identity theft. The most popular alternative is to trick a legitimate card holder into adding a thief’s name as a second authorized user to the same card, often only for a few days, on the pretext of helping rebuild someone’s damaged credit history. The thief then inherits the original card holder’s credit history, even if the original holder removes them as an authorized user. Using this inherited history, the thief begins applying for multiple lines of credit. After these lines of credit have been obtained, the thief maxes them all out by buying retail gift cards and merchandise that can easily be resold, such as smartphones.

Data Furnishing. A third type of synthetic identity theft, known as data furnishing, involves a theft ring infiltrating or creating a company that extends lines of credit to customers. The thieves inside the company grant credit to phony applicants for fictitious purchases in order to build a credit history. After a credit history has been built, it can then be used to apply for multiple lines of credit, to be used for fraud.

Protecting Yourself Against Synthetic Identity Theft

Being aware of these scams is a first step toward protecting your identity. Following LifeLock’s Facebook posts will help keep you current on the latest scams to watch out for.

There’s no surefire way to keep thieves from randomly selecting your Social Security Number, but you can take steps to make it harder for them. ID Analytics chief analytics and science officer Stephen Coggeshall recommends shredding any paper that contains your Social Security Number or other sensitive information, particularly your date of birth and bank and credit card account numbers. Be on guard against phone calls, emails, or texts soliciting such personal information. Some scammers will call pretending to be from your bank, your credit card company, or a government agency.

Signs that your identity has been compromised can show up in the form of mail coming to your house addressed to someone else or activity on your credit history that you never initiated. You should check your own credit report annually and check your children’s at least once every two years.

If you suspect you or your child have been the victim of identity theft, you should alert the police and the three major credit card bureaus: Equifax, Experian, and TransUnion. You should also file complaints with the Consumer Financial Protection Bureau and with the FTC.