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Synthetic Identity Theft
Posted on Jun 29, 2007 by Tom Fragala
We have blogged about this before and inside the industry this term is getting a lot of play. The mainstream media is starting to pick up on synthetic ID theft. Simply put, it means an imposter uses different parts of an identity to commit fraud (one person’s name and another SSN). It is particularly hard to detect and investigate, yet the negative impacts could be as bad or worse than “regular” ID theft.
From a 10News report:
Five years ago, this crime was hardly seen, but Stephen Coggeshell of ID Analytics said, “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 does not show up on your credit report because not enough of the ID information matches you. However, your stolen Social Security number could end up in all kinds of different databases, including those used for background checks.
Privacy expert Chris Hoofnagle said, “What synthetic identity thieves do is pollute the files."
Then the article gives this advice:
To find out if you’re a victim, experts said there are steps you can take.
“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,” said Hoofnagle.
Without checking the statement, the IRS could end up knocking on your door, experts said.
While I agree this is a good idea, an SSA statement does not prove you are not a victim of ID theft, including synthetic identity fraud.
Bob Sullivan of NBC, recently wrote an excellent, must-read blog post about a related topic (mixed SSNs) that is apropos here. He did the research and discovered the flaws in the system:
Checking annual Social Security earnings reports for mistakes is a good idea – particularly if you are not getting credit for your earnings. But SSN-only identity theft will not appear on this report, because only wages reported using the correct name and number are credited to your account.
When someone pays federal taxes using the wrong number, these "no-match" situations are flagged immediately by Social Security. When taxes are paid by a worker who is not the rightful holder of a Social Security number, the government sets the wage credits aside into what's called an "Earnings Suspense File." That file now holds more than $500 billion in uncredited earnings.
But the consumers involved are not notified that their Social Security number is being used by someone else.
And if someone does not pay federal taxes when using your SSN illegally to gain employment? Not good. You could end up owing taxes on wages you didn’t earn, have a lien placed on your assets, and much more, as Bob continues,
often, they share these numbers with other family members – many victims report they have 5 or 10 imposters. Any one of them may ultimately run into financial or legal trouble that could ultimately be intermingled with the victim’s identity. In one extreme example, a Bank of America customer named Margaret Harrison received a debit card with her name, but her immigrant imposter's face.
Learn more about synthetic ID theft from Bankrate.com.
Comments
ed dickson on Jun 30, 2007
A good idea might be to run a SSN through one of the big data search services.
The credit bureaus can also run what is known a SSN trace.
Unfortunately, data error entries often muddy the waters. The credit bureaus have been compiling data entry errors for years - and they will all have disclaimers stating this.
If you ponder this - all the errors enable synthetic identity theft and make it very hard to detect.
It's ironic that we have data bases being compiled with all kinds of errors on them and unless the individual checks and corrects them, they remain on there.
So far as tracing all the errors, it takes access and someone, who really knows what they are doing.
Please note, I'm speaking from personal experience.
The most scary thing is that this type of information does show up on all the "paid for" background checks most companies perform in pre-employment situations.
I would be willing to bet that a lot of people don't get hired because of this.
Privacy laws make the matter worse. Fear of litigation will prevent most employers from revealing this to a prospective candidate.
I wonder what would happen if the people gathering the data were required to fact check what they are selling?
Billions of dollars are being made selling this information.
And the people making billion would prefer to keep doing so at everyone else's expense.
Great post Tom!
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