As the above video suggests - if someone uses your Social Security number on a credit application, you might not find out about it. Not even if you checked your credit report.
Why? You could be a victim of synthetic identity fraud -- a rapidly growing type of ID fraud. Thieves literally create new identities either by combining real and fake identifying
information to establish new accounts with fictional identities or create the new identity from totally fake information.
In typical synthetic fraud, a fraudster uses a real Social Security number and combines it with a name other than the one associated with that number. The
combination often doesn't hit the consumer's credit report, says Chris Jay Hoofnagle, senior staff attorney to the Samuelson Law, Technology and Public Policy Clinic and senior
fellow with the Berkeley Center for Law and Technology at the University of California.
Synthetic fraud is quickly becoming the more common type of identity fraud, surpassing "true-name" identity fraud, which corresponds to actual consumers. In 2005, ID
Analytics reported that synthetic identity fraud accounted for 74 percent of the total dollars lost by U.S. businesses to ID fraud and 88 percent of all identity fraud "events" -- for
example, new account openings and address changes. For a comparison chart of Synthetic vs. true-name ID fraud, click
What Is It?
As a definition - Synthetic Identity Theft is a type of ID fraud in which thieves literally create new identities either by combining real and
fake identifying information to establish new accounts with fictional identities or create the new identity from totally fake information. In typical synthetic fraud, a
fraudster uses a real Social Security number and combines it with a name other than the one associated with that number. The combination often doesn't hit the consumer's
While there are no reliable figures documenting losses from synthetic identity theft, some experts estimate that "synthetic
schemes constitute at least 20% of credit charge-offs and 80% of losses from credit-card fraud."
Victim surveys do not capture synthetic identity theft, a critical piece of the overall crime of identity theft. Synthetic identity theft is elusive because the
individuals whose information was used may never become aware of the crime, and thus do not convey a victim’s story to a polling organization. Individuals whose
data were used to create the synthetic identity rarely, if ever, report the crime to law enforcement agencies because "the combination of the name, address and
Social Security number do[es] not correspond to one particular consumer." As a result, the fraud often goes undetected. Financial institutions are also unlikely to
report the theft. As the consumer reporting agency Experian explains, "no victim steps forward to claim fraud," so
the "accounts are charged-off as a credit loss before the institution is aware of the problem."
11.7% of successfully opened fraudulent account applications were opened using a real person's identity. The remaining 88.3% of the
successfully opened fraudulent account applications appeared to be opened using a synthetic identity. Synthetic identity fraud also represented the majority of dollar losses: 73.8% of
dollar losses were due to synthetic identity fraud, compared to 26.2% for true-name identity theft.
While creditors are hardest-hit, synthetic identity fraud affects consumers in 3 significant ways:
1. Consumers Partially Pay for It. Indeed, creditors do bear the financial burden of fraud losses.
Still, they pass some of those costs on to consumers through fees and higher interest rates, says Hoofnagle. "Although it's diffuse, we're talking at least tens of billions of dollars" worth of the hit.
2. Debt collectors could come after Innocent Consumers Based on SSN. There could be a consumer victim if a creditor ignored the fictitious name given
and pursued the individual whose Social Security number was used, he says. Collection agencies have the ability to perform "Social searches" on Social Security numbers
to find current addresses for delinquent debtors. A Social search will also turn up names associated with that
Social Security number, which means innocent consumers could hear from debt collectors.
3. Synthetic ID fraud creates file variations at the Credit Bureaus. Synthetic ID Theft creates subfiles at the credit bureaus.
The term subfile, says Evan Hendricks, author of "Credit Scores and Credit Reports," refers to additional credit report information tied to a real consumer's
Social Security number, but someone else's name. Because the identifying information contains some data that's already linked to a particular consumer, the
subfile gets associated with the consumer's main file, or "A" file.
Subfiles can surface when a creditor checking a consumer's credit report asks for all the
possible files related to that consumer -- if they want all the files associated with a particular Social Security number
Note, however, that variations in credit files are natural. Variations can occur due to typos; for instance, when a creditor types in the information
from an application to request a credit report on a consumer. Two names could also get
associated with one Social Security number; for example, when a woman changes her name after marriage. Hence, the difficulty in gathering accurate
statistics regarding identity theft (and hence the seemingly-decrease in its existence).
If you want to know what you can do to avoid becoming a victim of identity theft, please see our
best practices section. In addition, one should regularly make sure that creditors, if they deny you credit of any sort, based their decision
on your credit information -- and only your credit information.
1. Check Your Credit Reports. Look for accounts that don't belong to you, and keep an eye out for innacurate versions of your name, address, and/or SSN.
2. Watch Your Mailbox. Look out for suspicious mail, such as change-of-address notices and credit offers with significant variations on your name.
Notify the credit bureaus of your correct name. Contact your post office if you didn't initiate an address change.
3. Monitor Your SSN. Credit Monitoring no longer seems to cut it.
Instead, there are identity monitoring services out there, such as
MyPublicInfo that will, for a fee, scour the Web, black market and public
records for personal and financial information belonging to the subscriber, such as an address, credit card number or
Social Security number. Unlike credit monitoring, the service doesn't rely on a Social Security number matching other identifying information.
To find out if someone is using your Social Security number to obtain employment, you can order your Social Security Statement, which provides a record of the earnings
on which you have paid Social Security taxes,
online or by calling (800) 772-1213, or by going to your local Social
Security Administration office. Call the fraud hot line at (800) 269-0271 if you find earnings you don't recognize.
4. Scrutinize Credit Denial Letters. If you get turned down for credit, make sure the decision
was based on your file information only.