Financial blogger Thom Fox shares a look at an evolving identity theft threat and offers ideas on how to stay one step ahead of its reaches.
When I first heard the term synthetic identity theft, my mind flooded with images from "Terminator 2: Judgment Day." In the movie, the original Terminator had a change of heart and protected our young hero. But there's a new Terminator who can change his form at will and dissolve into pieces to get around obstacles. As it turns out, synthetic identity theft isn't too different from this premise.
Like the enhanced Terminator, synthetic identity theft can prove far harder to combat than garden-variety identity theft. Synthetic identity theft occurs when someone creates new identities from a combination of real and false information. For example, a synthetic identity thief steals someone's Social Security number and uses it to create a fictional credit profile for a fictional person. This identity thief will then establish a host of supporting fictitious information, such as employment history, credit card accounts, mortgage accounts and other applicable data, to be associated with this profile. Much of the collateral that synthetic ID thieves about you is captured from your behavior online, so be vigilant with your online spending and careful where you share your identity on the web and via apps.
The three credit bureaus' credit reporting systems are pretty savvy when it comes to picking up anomalies in your account information. But even these checks and balances can have a hard time catching instances of synthetic identity. That's because identity thieves use only parts of your information cobbled onto information from other files. In an effort to maintain the integrity of an individual's credit profile, credit reporting agencies rely on matching people's names, Social Security numbers, addresses and several other types of information when compiling credit records from data. If a piece of information is matched to two profiles, the differing information within the accounts would flag an issue and alert the system, reducing the likelihood of duplicate records directly impacting your credit scores.
However, there are a few things that can tip you off if you've fallen victim to synthetic identity theft. If you begin receiving mail in someone else's name on a regular basis, or you're turned down for a loan for which you thought you'd easily qualify, it might be time to check your credit report. Ideally, you check your credit information before you apply, and on a regular basis regardless. You should also review your annual Social Security statement to verify that the reported income matches your actual earnings. If your earnings appear higher, you can initiate an inquiry with the Social Security Administration.
Ultimately, a regular, or ongoing, review of your credit report will ultimately help ensure the accuracy of your credit. Unlike the Terminator, synthetic identity theft does not signal the end of the world. With some detective work and patience, you can get things back on track.
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This article was originally published on October 7, 2016, and has been updated.