Synthetic ID Theft Uses Social Security Numbers

Wednesday, June 20, 2007

Thieves are taking identity theft to a whole new level. Synthetic ID theft can ruin your finances. People steal your Social Security number and then use it under a different name. It's almost impossible to prevent, but there are important red flags to watch for so you can lessen the damage.

"I had a woman who called me who had found out that someone used her Social Security number with a different name to work," said Mari Frank, attorney and identity theft expert.

Seven years later, the IRS tracked down Frank's client..

Frank: "And [the IRS] had charged her with thousands of penalties and fees and were going to literally put her in jail!"

She was a victim of synthetic identity theft. Unlike traditional ID theft, crooks steal your Social Security number, but tie it to a different name creating a new, fictional person. That makes it harder to detect.

Frank: "So it is actually more insidious and more frightening for a victim."

The thieves open bank accounts and credit cards, even get jobs. Yet it can take years to uncover. Why? It's difficult for the authorities and creditors to unravel all the mismatched information. Five years ago, this crime was hardly seen.

Stephen Coggeshell, ID Analytics: "Eighty-five to 90 percent of identity fraud is really this synthetic ID fraud, as opposed to the true name identity theft."

Since the fraud isn't committed in your name, it typically doesn't show up on your credit report because not enough of the ID information matches you. But your stolen Social Security number could end up in all kinds of different databases, including those for background checks.

"What synthetic identity thieves do is pollute the files," said Chris Hoofnagle, privacy expert.

Which could impact you when you go for a loan or apply for a job. And the trouble isn't always financial.

"I had another gentleman, his Social Security number was used by someone who was tried for murder and so every time there was a background check that pulled up his name, it linked these other databases showing him as arrested for murder!" said Mari Frank.

To find out if you're a victim, there are steps you can take.

Chris Hoofnagle: "Look at your Social Security statement that you receive once a year from the government carefully and make sure that there isn't income on there that you didn't actually earn."

While synthetic ID fraud doesn't typically show up on your credit report, experts say it's still critical to check your report yearly to verify all activity.

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