Synthetic Identity Fraud on the Rise
Synthetic identity fraud is on the rise in the United States, and fraudsters are using new methods to create synthetic identities, according to new research from ID Analytics . The study found the number of new social security numbers (SSNs) appearing on applications has more than doubled, which they say is a strong indicator that many of these SSNs could be fraudulent.
ID Analytics’ report, “The Synthetic Epidemic: Understanding Identity Fraud after SSN Randomization,” discusses the three most common types of synthetic identity fraud:
- Traditional Synthetics. Fraudsters use stolen information, including SSNs, from a number of real victims and combine that information to create single fake identity.
- Manipulated Synthetics. An applicant uses their real identity but changes their SSN in an attempt to avoid their history and access credit. While these people are not career criminals, they are defrauding lenders.
- Manufactured Synthetics. Fraudsters create identities entirely based on false information, including fake SSNs that are created from the same range of numbers the Social Security Administration uses. Criminals use these fake identities over time to develop a credit history. While they initially appear as new-to-credit consumers, they can build credit lines and eventually max out their cards before disappearing.
Manufactured synthetic identities have been rising since 2011 when the Social Security Administration began randomizing SSNs. The organization adopted that practice, believing it would be more difficult for crooks to steal SSNs. But randomization has also made it more difficult for fraud detection systems to determine whether a SSN is real.
The rise in manufactured synthetic identities is of major concern, as it is difficult to detect and fight. Since fraudsters can create identities with no links to consumers, it is less likely the fraud will be reported, which makes it more difficult to address.