Identity theft seems to be the story of the year after the February breach at insurance giant Anthem. Names, birthdays and — most damaging — Social Security numbers of an estimated 78.8 million people were compromised. That’s the sort of information that can be used for a rapidly growing form of identity theft called synthetic ID theft.
What is it? Synthetic ID theft is essentially the piecing together of a brand-new identity using a combination of real and fake information. For example, thieves may use a fake birthday, fake address and a fake name, combined with a real Social Security number to create an entirely new person and establish credit in their name. This kind of ID theft is the fastest-growing form, according to the Federal Trade Commission, and accounts for up to 85 percent of all identity fraud.
The damage generally hits the person whose Social Security number is being used. Often, the fraudulent information will be added to their credit history as a subfile — and if the information is derogatory, it can bring down their credit score. Worse, it may take years for victims to find out about it because much of the information doesn’t match their own.
How do you protect yourself? Here’s what you need to know.
The best defense is an alert offense. “It used to be that I’d tell people all the bad stuff about identity theft, and then cheer them up at the end with 10 things you can do to prevent it,” says Neal O’Farrell, founder of The Identity Theft Council. “We’re running out of things you can do to prevent it. I believe it’s really impossible to stop identity theft, and the focus is really on minimizing the chances it will happen to you, and minimizing the damage and the long-term impact if it does.”
The best solution: Early detection, which means checking your credit reports as often as you can and freezing your credit if you think you’re likely to be a victim. Credit freezes are free to victims in many states; others will pay $5 to $10 per bureau.
When is the last time you checked your credit report? Get it free at mybankrate.com.
Watch out for red flags. As I noted, this kind of ID theft can go undetected for years. But there are a few things that may tip you off, if you pay attention. One is your annual Social Security statement. An inflated income for the year could indicate that a thief has been earning income using your Social Security number. You should also note any mail that is sent to your address under a different name. It could mean your address was used as part of a scam.
Children are at risk. Because kids have Social Security numbers but no credit history — and they are unlikely to be monitoring their credit — they are attractive targets for ID thieves, says Gordon Lukehart, a detective in the Los Angeles County Sheriff’s Department’s identity theft detail.
“These crooks are using newer Social Security numbers, and picking on kids who don’t have credit yet,” he says. “Just as you can check your own credit three times a year for free, you should run your kids’ as well. It should show up if someone has adopted their Social Security number.”