Synthetic Identity Fraud

Synthetic identity fraud is the fastest-growing financial crime in America, and it's fundamentally different from traditional identity theft. Instead of stealing your entire identity, criminals take just one piece—typically your Social Security number—and combine it with fake information to create a brand new "person." **How Criminals Build Synthetic Identities:** 1. **Data Harvesting:** Criminals obtain real SSNs from data breaches (1.7 billion breach notices were sent in 2024 alone), dark web marketplaces, or by targeting vulnerable populations whose SSNs aren't actively monitored—children, elderly in care facilities, recently deceased, and immigrants. 2. **Identity Construction:** They pair your real SSN with a completely different name, date of birth, address, and phone number. The resulting "synthetic person" is a Frankenstein identity that doesn't match any real individual. 3. **Credit Building:** The synthetic identity applies for credit and gets rejected—but this creates a credit file. Over months or years, they build legitimate-looking credit through authorized user piggyback schemes, secured cards, and small loans. 4. **The Bust-Out:** After building good credit, they max out all available credit, take large loans, and disappear. The "person" never existed, so there's no one to collect from—except YOU, the SSN owner. **Why It's So Dangerous:** - **No Victim Alert:** Because the name isn't yours, credit monitoring doesn't catch it. You won't see inquiries or accounts under a different name on your credit report. - **Sub-File Problem:** The synthetic identity creates a "fragmented" or "sub-file" attached to your SSN. This can surface years later when you apply for credit, a mortgage, or government benefits. - **Children Are Prime Targets:** Kids' SSNs are valuable because they won't be used for years. By the time they turn 18 and apply for their first credit card, their SSN may have a decade of fraudulent history. - **AI Acceleration:** Generative AI now creates realistic fake documents, social media profiles, and even deepfake IDs that can pass verification checks. Fraud attempts involving AI deepfakes surged 2,137% in three years. **The Scale:** - Synthetic identity fraud accounts for 80-85% of all identity fraud (ID Analytics) - 44% of organizations rank it as their top fraud concern - 67% of financial institutions saw fraud rates increase in 2025 - US lenders faced $3.3 billion in synthetic identity exposure in the first half of 2025 alone