Synthetic Identity

Frankenstein Fraud, Synthetic Identity Fraud

Synthetic identity fraud is the use of artificially constructed identities, fake or mismatching personally identifiable information to scam organizations.

Synthetic identities are created by mixing real and fictitious identity information — including names, addresses and Social Security numbers (SSNs) — to create new identities. The randomization of SSNs in 2011 and the vast amount easily accessible information, like addresses, has created an abundance of personal data available online for fraudsters to mine and turn into synthetic identities.

These identities, also known as SIDs, are then used by criminals to defraud financial institutions, private industry, government agencies or individuals. Fraudsters use these identities to apply for credit accounts and the identity is then reported by the financial institution to credit reporting agencies, creating a new record associated with the fraudulent information.

Once approved, SIDs behave like legitimate accounts and are often not flagged as suspicious by usual fraud detection tools. Because there’s no victim to discover and report the fraud, these identities tend to go unnoticed.

The goal of these falsified identities is to act like legitimate, trustworthy consumers so that they can build their credit histories and increase their credit limits, leading to a greater windfall. Criminals will cultivate multiple SIDs at the same time before “busting out” or racking up charges and loaned funds and disappearing with no intent to repay.

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