One of the greatest problems with identity theft is that many of the most at-risk victims do not realize how easy it is for others to compromise their personal information and use it to do significant financial harm.
People assume, for instance, that identity thieves need to obtain numerous pieces of information before they can act on it. However, as we have seen in recent years, this is not the case. In fact, it has been estimated that 85 percent of all cases of identity theft in the U.S. are caused by “synthetic” ID theft, costing about $2 billion per year.
A recent article on ABC News explained how this tactic works. Rather than steal every piece of personal information they can get their hands on, identity thieves will only target one or two facts about you and then combine that with false information, which they can then use to open bank accounts and credit cards under your name.
“Synthetic identity fraud is when the fraudster uses one true piece of your identity… and then combines it with fake information, so perhaps a different name, a different date of birth,” Eva Velasquez, the CEO of Identity Theft Resource Center, told ABC News. “The scope can vary and there are some very large fraud rings. Particularly when they’re using online platforms, they can affect tens of thousands if not hundreds of thousands of people.”
For instance, if a thief knows your name and address, they may be able to create an account under your name using a credit profile number (CPN) in place of a Social Security Number. ABC News discovered that there are certain credit repair companies who will sell illicit CPNs to people who want to open up new credit cards that will not be tied to their poor credit histories. They can also use these numbers to apply using different names. Often, they get away with this because credit card issuers do not thoroughly check the veracity of these numbers.
In addition, the FBI confirmed that it is technically possible to access Social Security Numbers that have not been issued yet through security flaws in government websites. Identity thieves can also use these to fool banks and credit card companies to open accounts under someone else’s name. And this ends up hurting everyone.
“When the credit card companies are assuming the liability of these fraudulent charges, they do have to recoup that money in some way,” Velasquez said. “That generally translates into higher fees and higher interest rates.”
But it’s particularly bad for the victims, who may realize too late that it is possible for thieves to compromise their identity with almost no real personal information. This serves as an important reminder that many methods for preventing identity theft still have weaknesses.
The best thing consumers can do is be proactive about watching their credit. Consider signing up for a credit monitoring service that can alert you to certain activity on your credit file that may be indicative of fraud. This will allow you to take the appropriate steps to mitigate the situation.