07/14/2020

Deep Dive into Synthetic Identity Fraud

Security Boulevard

The fraud landscape is evolving and, as the world becomes increasingly digital, so do the criminals. From petty schemes to high-class social engineering strategies, fraudsters cash out on billions each year.

Creating a fake identity

The FTC calls synthetic identity fraud “one of the fastest-growing financial crimes” in the United States. Unlike traditional forms of identity theft, criminals don’t steal an identity, but create a new one, using a combination of fake and real information. For example, an identity thief can combine real Personally Identifiable Information (PII) such as a Social Security number with a fake name and address to open bank accounts and seek credit, apply for a job or obtain health insurance.

Although it takes longer for criminals to establish a realistic credit history, fraudsters may create multiple “customer profiles” before attempting to make a large purchase or obtain significant bank loans. As such, their modus operandi includes piggybacking on accounts belonging to other real or fake individual with a good credit score.

After creating a fake identity, the fraudster will apply for credit, immediately triggering the creation of a credit file or proof that the identity exists. The scammer will repeatedly apply for credit until it is approved, and continue to legitimize the synthetic identity. In the end, the fraudster will “bust out” and completely vanish without paying his loans.

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