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The rise of synthetic identity fraud and children

synthetic identity fraud

Synthetic identities come from accounts held not by actual individuals, but by fabricated identities created to perpetrate fraud. It often starts with stealing a child’s Social Security number (SSN) and then blending fictitious and factual data, such as a name, a mailing address and a telephone number.

What’s interesting is the increase in consumer awareness about synthetic identities. Previously, synthetic identity was a lender concern, often showing itself in delinquent accounts since the individual was fabricated.

Consumers are becoming aware of synthetic ID fraud because of who the victims are — children. Based on findings from a recent Experian survey, the average age of child victims is only 12 years old. Children are attractive victims since fraud that uses their personal identifying information can go for years before being detected.

I recently was interviewed by Forbes about the increase of synthetic identities being used to open auto loans and how your child’s SSN could be used to get a phony auto loan. The article provides a good overview of this growing concern for parents and lenders.

A recent Javelin study found that more than 1 million children were victims of fraud. Most upsetting is that children are often betrayed by people close to them — while only 7 percent of adults are victimized by someone they know, 60 percent of victims under 18 know the fraudster. Unfortunately, when families are in a tight spot financially they often resort to using their child’s SSN to create a clean credit record.

Fraud is an issue we all must deal with — lenders, consumers and even minors — and the best course of action is to protect ourselves and our organizations.