Now there’s an actual credit report, albeit with a zero-credit history, attached to the synthetic profile. The real goal is the new credit file the system set up automatically when the fraudster applied for credit with fake information. Once they choose a fake name, address, and phone number, along with a birth year that makes the person belonging to this artificial profile holder at least 18 years old, they are ready to establish a credit file for this bogus person’s identity.Ĭredit bureaus maintain credit files on millions of individuals, including people who do not even exist! When a thief uses a synthetic identity to apply for credit, perhaps to finance a purchase or open a new merchant account, the credit bureau’s system denies the application based on not recognizing the person’s identity data. Some fraudsters use other sophisticated tactics such as using real SSNs belonging to people who have been incarcerated for a long period of time, but many begin with a child’s SSN that was issued after 2011. The most popular way to commit synthetic identity fraud is to establish a false credit file built on a real SSN or Individual Taxpayer Identification Number (ITIN). See the synthetic identity infographic for quick takeaways …And how it works today If it showed unissued, bingo, they had a counterfeit SSN at their disposal to commit synthetic identity fraud. They simply used the SSA’s algorithm to generate their own, random, nine-digit numbers then ran those fake numbers through a social security number validator. If the SSA could randomize SSNs, then so could the identity thieves. Criminals could no longer steal SSNs based on information coded in the last four digits, but an unintended consequence created entirely new fraud schemes and tactics. In 2011, and in an effort to prevent fraud, protect personal identities and help law enforcement fight identity thieves, the Social Security Administration (SSA) randomized all newly issued social security numbers (SSNs). And if one knew the last four digits, it was easy to discover the first five numbers which, in turn, increased financial crimes such as application fraud, medical identify theft, and even child identify theft. Prior to 2011, one could determine the year and location a social security number was issued based on the last four digits. The identity thieves use the fake profiles to engage in fraudulent activity such as creating phony credit files or opening sham credit card and bank accounts. Synthetic identity fraud occurs when criminals combine real and false information into new, bogus identities in order to commit financial crimes.