Synthetic identity theft is one of the fastest growing forms of identity theft in the country, according to the Federal Reserve. A synthetic identity is created by combining real and falsified information in order to create an identity for financial gain and other purposes.
Synthetic identity thieves are particularly attracted to children. Find out how synthetic identity theft targets children, and how you can protect them.
How Synthetic Identity Theft Works
A synthetic identity is created by combining real and false information. False identities can be used for financial gain, to create fake accounts, for medical identity theft, and more.
An SSN can be obtained from a data breach, phishing attempt or other scam, which gives criminals access to a legitimate Social Security number (SSN). A SSN combined with falsified information, such as a fake name and address, can be used to commit fraud.
In some cases, criminals may even spend time building the credit of the fictional person in order to commit greater fraud in the future.
Why Children are Vulnerable
It is possible for anyone to become a victim of identity theft, but children are more appealing to synthetic identity thieves for several reasons.
- Criminals can work with a blank slate since children have no credit history.
- Families may not become aware of identity theft until their child turns 18 and tries to open a credit account.
- In 2011, the creation of Social Security Numbers was randomized instead of based on geography and age. Although this randomization makes it harder for criminals to reconstruct a person’s social security number based on public records, it also prevents financial institutions from verifying a person’s social security number based on his or her location or date of birth.
The Cost of Synthetic Identity Theft
If the victims are able to prove they are not involved, they are not liable for any losses. Typically, financial institutions cover the majority of the costs.
Children who have had their identities stolen face a tough time recovering their SSNs, especially if the fraud occurred over a long period of time or the criminal accumulated substantial debt. The reason for this is that credit bureaus and financial institutions assume that the first person to establish credit under an SSN is the actual owner.
This means that the victim must prove his or her identity and clean up his or her credit record. This can involve out-of-pocket expenses, even though financial liability is limited.
How to Protect Your Child
It’s impossible to guarantee your child’s identity will never be stolen, but you can take some steps to help prevent it.
- Sign up for credit monitoring and identity theft insurance, which will help you cover out-of-pocket costs, as well as help you restore stolen identities. Many identity protection plans include identity theft insurance.
- Check with the credit bureaus to see if your child has a credit report. This might be a sign of identity theft.
- Keeping birth certificates and social security numbers safe and locked away is important.
- Don’t share too much information about your child online or in person. Teach your children how to guard information as soon as they are old enough.
Is your personal information on the dark web? Make sure your identity isn’t at risk!