Of all the methods fraudsters use to steal identities, synthetic identity may be the most sinister. That’s because it could take years before it’s detected, and by then, the damage has been done and the fraudster has moved on to other victims.
Here’s how synthetic identity fraud works: Swindlers use a stolen Social Security number to establish a new credit history with a fictitious name, address and birthdate. Criminals then use that new credit identity to open fraudulent credit card accounts. However, it can take several years for the fraudster to build a sufficient credit history to qualify for a credit card account. They may add the fictitious person to a legitimate account as an authorized user until new credit has been established. They may also use the fictitious credit accounts for a while to build up their credit limits.
Once the credit limits are high enough, the fraudster goes on a spending spree and maxes out the accounts before abandoning the identity.
While anyone can be a victim of synthetic identity fraud, young children are often targeted because parents aren’t known to check their credit reports. It’s not until the child applies for their own credit that the fraud is detected. In fact, over time, the fraudster could have used the child’s Social Security number to establish multiple fake identities.
Here are some strategies to guard against synthetic identity fraud:
Monitor your credit monthly. A credit monitoring service will notify you if your Social Security number has been used to open a new account.
Check your child’s credit report each year. If a record of your child’s credit pops up, it’s a major red flag.
Keep your and your child’s Social Security number to yourself. Never provide a Social Security number online or over the phone unless you know for certain the request is legitimate.
Freeze your child’s credit. You may have to create a credit record for your children so you can freeze it. Once frozen, no new accounts can be established with their Social Security number.