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Synthetic identity theft and fraud

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    You've probably heard of synthetic fabrics or fuels—but what about synthetic theft? While it could initially sound like a term from science fiction, it's actually a regular, everyday occurrence that can have a huge impact if not caught early and addressed.

    So, what is it? And how could it affect you? In this article, you'll learn:

    • What synthetic identity theft (SIF) is
    • How synthetic identities are created
    • How synthetic identity theft works
    • How synthetic identity theft affects your credit
    • What to do if you're a victim of synthetic identity theft

    What is synthetic identity theft?

    You may have heard of identity theft before—where a criminal steals existing information and uses it for financial gain, to hide crimes or even for revenge. This information isn't altered in any way, but stolen to take advantage of your accounts, money, etc.

    Synthetic identity theft, on the other hand, involves creating a new identity altogether. According to U.S. Government Accountability Office (GAO), synthetic identity fraud is a crime where a perpetrator combines real and/or fake information, such as Social Security numbers (SSN) and names, to generate new identities. A perpetrator then uses these identities to commit fraud within financial institutions, credit bureaus— like Experian™, Equifax® and TransUnion® —government agencies or individuals.

    According to the Federal Trade Commission, studies show that SIF accounts for 80–85% of all identity fraud. 

    Who is at risk?

    Anyone can be vulnerable to SIF, but children are particularly vulnerable. This may be due to the fact that they may not be old enough to apply for credit and can have their information stolen and used against them for years without even realizing it. For example, a criminal could steal a young person's SSN and apply for credit cards or loans in a different name—putting the child's SSN and identity at risk.

    Others, including older populations or those who work at large, well known organizations, may need to also keep a careful eye on their information. Both public and private sectors are at great risk of having important information stolen and used against them. These are just some of the reasons that monitoring your identity, credit reports, passwords and other sources of information is so important.

    How is a synthetic identity created?

    According to Experian™, a perpetrator may steal someone's personal information or buy it on the dark web, then combine it with fake information to create a new identity. This is a person who knows how to access sensitive information, whether they've stolen information offline or stole physical documents with identifying information. A fraudster combines this information with other fake identifying factors—like a fake name or home address—to come up with a fake profile. 

    How does synthetic identity theft work?

    Think of synthetic identity theft as a customized, fake profile created for someone's personal gain. For example, a fraudster may use your SSN and combine it with other fake information like a mailing address or name to create a credit profile. According to the GAO, when applying for credit, a fraudster's fake profile may not be recognized by the credit bureaus. While their first application could be rejected, if the fraudster is diligent and able to get approved applying a second time, their information on file could appear legitimate. The perpetrator can then make payments using this fake profile to build up a credit record and then exploit other institutions. For example, they may take out loans or abuse the Social Security system. Below is a step-by-step process of how a person may build a synthetic identity, according to the GAO.

    Step 1. Steal a real SSN

    The criminal first needs information that is real, such as an SSN, and a non-matching identifier such as name, date of birth or address to create the identity. This can be done by stealing information from the dark web, through data breaches or other means.

    Additionally, there are many occasions where someone could provide illegal phishing sites that appear legitimate, but are actually fake with the intent of stealing information. They could appear trustworthy and prompt you to provide you with your SSN—this is a misrepresentation in an effort to defraud and obtain SSNs.

    Step 2. Apply for line of credit

    The criminal will use their fake identity to apply for a line of credit at a bank. This information will go through the credit bureaus, which may reject the application at first because there is no profile on record. However, now that the profile has been created in their system, the criminal may be able to apply a second time and gain approval. Now that the information has been included in the credit bureaus' systems, it's likely the fraudster to apply for a line of credit and this time be approved. 

    Step 3.Receive credit

    Once the criminal has been approved for a line of credit, they'll have access to funds and may apply for multiple credit cards.

    Step 4. Maintain credit card profile

    The criminal may build up their credit history and profile over time to be able to apply for more cards and receive higher credit limits. All the while, you may be negatively impacted by having your information, reputation, or credit score damaged, depending on what information was stolen and used against you.

    Step 5. Exploit financial institutions

    At this point, the criminal can charge maximum amounts on credit cards, completely disregarding billing statements and any financial obligations. This final step is known as a "bust-out," which happens when a criminal applies for a credit card, establishes a regular pattern of behavior and building payment history, then maxes out the credit card without paying the bill. The criminal has exploited a financial institution as much as possible. They may also use their fake identity to get access to government benefits and more. 

    How does this relate to credit?

    One way to know if you've been a victim of synthetic identity fraud is by checking your credit report and monitoring your accounts. According to the GAO, criminals typically steal SSNs from individuals who are less likely to use their credit actively, such as children. These victims may face difficulties obtaining credit or other related problems in the future once they are old enough to apply for credit cards.

    Now that you know that your credit and credit score could be at risk, what do you do if your information has been stolen and used against you? Let's go into some options below.

    What to do if you've been a victim of synthetic identity theft

    Realizing there's an account opened with your SSN can create waves of shock and vulnerability as you come to terms with your most sensitive information being stolen and used by identity thieves. How could this happen, and what can you do to feel more secure? There are a few initial steps you can take if you've just realized you've been a victim of synthetic identity theft. These include:

    1. Report the theft. You can do this by going online to and contacting the U.S. Government Accountability Office (GAO) at or emailing you can also call (800) 424-5454 or (202) 512- 7470. You may also want to notify the Federal Trade Commission and the police and file a report with each.
    2. Contact relevant financial institutions. These include credit bureaus, banks and issuers. Make sure they have your correct, accurate information. You may want to freeze your accounts and dispute any other errors.
    3. Protect your information. Whether you're using identity and credit monitoring services provided by Chase Credit Journey® or regularly checking your accounts, you'll want to make sure your information is safe. It's essential that you always use strong passwords and only input personal information into secure websites.

    Bottom line

    SIF is just one of many forms of identity theft. While it can't be 100% prevented at this time, there are effective ways to be more savvy with sensitive information. The better you safeguard your personal information such as SSNs, credit card account numbers and other personal data, the less risk for potential theft. Taking precautions and ensuring your information is safe can help prevent you from becoming the next potential victim of synthetic identity fraud.

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