Synthetic identity theft and five steps to protect yourself from fraud

Millions of people are victims of identity theft and identity fraud each year, resulting in costly losses of time and money as well as the emotional ramifications of having your life upended by fraudulent activity. As necessary as baseline coverage is, now is not the time to assume your up-to-date security software and strong passwords alone will protect you completely.

Criminals are smarter than ever

According to Javelin Strategy & Research, identity fraud resulted in $16.9 billion lost in 2019 (latest data available). “Criminals are targeting smaller numbers of victims while inflicting damage that is more complex to prevent or remediate.”

Following is a look at key threats and how you can protect yourself from your personal information falling into the wrong hands.

Synthetic identity theft

There are many types of identity theft including medical, criminal, driver’s license, and tax identity theft, but one of the most common is synthetic identity theft. With this type of identity theft, real information, such as a Social Security number, is paired with a fake name to create a new identity. This “person” builds credit over time, often over many years, before striking, maxing out credit without repayment.

Fraud will follow

Where there’s theft, fraud follows. The Federal Trade Commission defines synthetic identify fraud as “the use of a combination of personally identifiable information to fabricate a person or entity in order to commit a dishonest act for personal or financial gain.”

One of the biggest problems with this type of fraud is that it often goes unnoticed for a long period of time.

Another concern, says Javelin, of high-impact identity fraud is checking and savings account takeover. “Account takeover fraud is one of the hardest types of fraud to identify because of the multichannel account access and the desire to reduce friction in the consumer experience. New technology is available to help mitigate risk and improve the consumer experience, yet often it goes unused or is unavailable to consumers. What is clear is that criminals are adapting to new technology faster than consumers will adopt technology to reduce their risk.”

Clues that your identity’s been compromised

One of the best ways to stay ahead of criminals is to pay attention to your accounts and notifications. Here are several clues that someone has stolen your information from IdentityTheft.gov, managed by the Federal Trade Commission:

1. You noticed unexpected bank account withdrawals or charges on a credit report.
2. A card or check is declined.
3. You don’t receive expected bills—or you do receive bills for medical services you didn’t use.
4. Your health plan shows you’ve reached your benefits limit much sooner than expected or is showing a medical condition you don’t have.
5. You receive calls from creditors.
6. The IRS says that you filed more than one tax return.

Five steps in 15 minutes

Tips abound about how to protect, but here are five simple steps you can take in 15 minutes to help protect yourself from identity theft and other online fraud.

1. Get your free credit report. Check your credit report at annualcreditreport.com, then add a reminder on your calendar to check it again in one year.
2. Change your “go-to” password. If you use the same password for two or more accounts, log on and change them to different passwords. Social media in particular is a breeding ground for hackers. If they manage to identify your social media password and name, they can easily test that password across a host of websites with more sensitive data. Sign up for a password manager so you don’t get locked out of your accounts. Set up two-factor authentication on your password manager – and anywhere else you can.
3. Create an account and check your Social Security earnings record. Report any misuse immediately.
4. Set spending and other alerts on all of your credit and bank accounts so that you’ll be notified quickly of any suspicious activity.
5. Finally, think about tax time year-round. It’s best to file early before fraudsters can attempt to legitimize synthetic identities with tax returns using your Social Security number. Taking a few minutes each month to organize receipts or update an ongoing tracker will help you file early to beat them to it.

Says Badgley Phelps Director of Information Technology and Operations Vaughn Clement, “As the saying goes, starting is half the battle. It’s easy to be overwhelmed when it comes to security. But a commitment to the tasks mentioned will go a long way toward keeping you safe. At minimum, adopting a password manager and embracing multi-factor authentication are fundamental requirements in today’s digital world. Those two commitments make you a much smaller and more difficult target for hackers.”

If you think you’ve been a victim of fraudulent activity, follow the steps to report it and learn what to do next on ReportFraud.ftc.gov.

Originally posted on August 13, 2022