By Brooke Crothers, Fox News
A new kind of identity fraud creates phony identities out of fake people and the U.S. government is expressing concern that this could become a go-to scheme for terrorists and organized crime.
Synthetic identity fraud creates, in effect, a new person by selecting the right social security number (SSN). This is a new twist to identity fraud, which typically uses an existing person’s identity to apply for credit or government benefits.
“The most common plan here is to randomly choose a SSN that wasn’t issued prior to 2011, when the [Social Security Administration] changed the rules on how SSNs were issued,” Kevin King, Director, Product Marketing at ID Analytics, told Fox News.
“By choosing a number from this range, they can have reasonable confidence that there won’t already be a history of another person using that SSN. Many sites on the internet provide guidance on how to do this,” King added.
While the schemes vary and the steps to establish a synthetic ID are different, very basically it can go something like this: the bad guy applies for a line of credit at a financial institution. While this can be rejected, the resulting credit inquiry generates a credit profile for the synthetic ID in the credit bureaus’ databases.
Once the synthetic ID is established via the generated credit profile (or credit file), the criminal again applies for credit, gets credit established, and then applies for multiple credit cards. The criminal in the final “bust out” stage waits until the credit score is high enough to yield a large payout, then charges the maximum on the card, as spelled out in a report from the Government Accountability Office (GAO).
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