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.
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.
Why? You could be a victim of
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
"True-name identity fraud was the prevalent identity theft mode about five years ago," says Steve Coggeshall, chief technology officer of ID Analytics. "Synthetic identity fraud is the dominant mode now."
||Synthetic vs. true-name ID fraud
|Synthetic ID fraud
should not be confused with true-name identity fraud.
Real people's identities are assumed in true-name ID fraud,
whereas in synthetic fraud scammers create a whole new
identity to open a new account. Here are some of the main
Effect on victim's credit reports
|Evidence of it is less likely to appear on a consumer credit report because the identifying information used to open new credit accounts doesn't neatly match one particular consumer.
||Evidence of it is more likely to appear on a consumer credit report because the identifying information used to open new credit accounts matches one particular consumer.
Why should you care?
Synthetic identity fraud mainly hurts creditors, but it affects consumers in three
1. Consumers are partially
paying 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."
Debt collectors could come after innocent consumers. 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