Identity theft Is a fast-growing crime around the globe. As new technologies are released, criminal tendencies continue to increase. Fraudsters create innovations in carrying out their fraudulent actions. They always find a new way to steal money, regardless of how many safety measures you put in place.
However, aside from other measures that you can use to prevent Synthetic identity theft, there are fraud detection solutions that can help to detect and to avoid Identity theft. Software and tools like SEON are helpful for preventing synthetic ID fraud for small businesses.
In this article, we explore the subject synthetic Identity theft, what it is, and how you can prevent it.
Table of Contents
What is Synthetic Identity Theft?
Synthetic identity theft is a fraudulent action whereby an individual creates a new identity for himself by combining both legit and false information. These criminals steal accurate information from the details of ignorant individuals to open accounts used to commit fraud and make fraudulent purchases.
Through synthetic identity theft, criminals extort money from businesses with weak security, using real and fake information like names, identity numbers, and addresses. They blend this information with forged details to create a profile they use to create accounts.
Frauds like synthetic identity theft are known as advanced grade fraud and are executed by top experienced identity criminals worldwide.
This type of fraud is a terrifying threat not only to financial institutions but also to small businesses. Synthetic identity fraud resulted in the loss of a whopping $20 billion in 2020, with the average criminal stealing $81,000.
It is difficult to remedy the effects of synthetic identity theft— it’s difficult to track criminals involved in this type of theft.
How Can You Detect Identity Theft?
Spotting a Synthetic Identity Theft is nearly impossible. This is largely owing to the fact that the fake identity looks like an actual customer of the business over a long period of time.
Unfortunately, these fraudsters have mastered the virtue of patience and know how to lurk around till they can run away with as many funds as they can.
Nonetheless, Software like SEON provides a fraud detection solution to detect and prevent identity theft.
How Does Fraud Detection Software Work?
The SEON fraud detection software works with the data you make available. However, the more data points you provide, the more efficiently the system does its job. It is advisable to offer device data, transactional information, and user data to effectively detect any risk-prone user.
You can also send information, like VIP membership, flight number, promo code, etc. You can set custom rules and filters based on them, and machine learning also conforms to custom parameters.
How Common is Synthetic Identity Theft?
Synthetic identity theft is fast becoming the most common Identity fraud overtaking the “true-name” identity fraud. The ID Analytics research asserts that it presently accounts for 80 -85% of all identity fraud.
In recent times, the strategy of identity theft has evolved. Unfortunately, ID thieves understand the changing stages of identity theft and continue to devise new means of extortion.
How Does Synthetic Identity Theft Work?
Synthetic identity theft criminals steal data from inattentive people and create a synthetic identity. Such data includes Social Security numbers (SSNs) and blends them with false details like date of birth, addresses, and phone numbers. They open a new account with an actual Social Security number, fake phone number, name, and address.
Most times, this kind of fraud goes unnoticed.
These thieves can steal:
- Tax-related information: You can use tax information from the IRS to recover extra personal data.
- Medical identity theft: These thieves also often use medical information to apply for prescription drugs or file insurance claims under someone else’s name.
- Child identity theft is Proof that fraudsters will go to any extent they can. Cybercriminals use children’s details to apply for credit cards or online loans. It works perfectly because their credit scores are either relatively high or nonexistent, and it will take many years before anyone realizes the information was compromised.
In November 2021, a report found that child identity fraud cost nearly $1 billion annually, victimizing 1.25 million children in 2020.
Individuals involved in synthetic identity fraud create several identities simultaneously and can keep accounts active and running for months or years without their fraudulent activities detected. They often use their accounts typically as they wait to establish a good credit history before committing their crime.
Some Identity fraudsters don’t steal from businesses, most especially small businesses, but create criminal accounts that help them make transactions and purchases.
How Do You Prevent Synthetic Identity Theft?
Businesses need to know the parties involved in every transaction, but regular strategies used to assess identity are often not as effective. Synthetic identity fraud is a widespread type of financial crime and must be dealt with competently to see results.
What measures can be employed to prevent Synthetic identity theft?
Individuals must understand that there are people who want to steal their data details. They want to hide their identity and access certain services and money.
However, there are measures to adopt to help you prevent Synthetic Identity Theft.
Monitor Your Credit
Monitor your credit, scan for any unfamiliar statements, and ensure all your information is correct. Get your credit statements from your bank yearly. Lock or freeze your credit reports. This will keep others from opening an account in your name.
Freeze the Credit Reports of Your Kids
Children below the age of eighteen are not spared from the activities of these thieves. This is because these youngsters do not have credit reports. This makes it easy for these criminals to create fake identities using pieces of their victims’ information, like their SSNs.
This is why you have to create and freeze kids’ credit reports, to prevent fraudsters from accessing their SSN to open fake credit accounts.
Be Careful of the Details you Share on Social Media
Fraudsters can patiently gather information from your social media content, like addresses, phone numbers, and birthdays.
Be clever with your posts, and don’t share personal details on public platforms.
Do Not Share your SSNs
This is mainly noteworthy if you have kids. Ensure you confirm from any organization that demands an SSN if sharing it is mandatory or if another type of personal data could suffice.
Keep an Eye on your Mail
Watch out for phishing emails— a deception in which fraudsters disguise themselves as trustworthy entities or people in an email.
Criminals will typically use phishing emails to deliver malicious links to your emails.
Preventing Synthetic Identity Theft Within Financial Institutions
You can help safeguard your company’s reputation and consumer base by practicing the following :
- Incorporate biometric capturing as you onboard new clients: Capturing biometrics like facial recognition and fingerprints when onboarding new customers reduce the possibility of that account being used for scams.
- Employ the multi-factor authentication process: Strengthen your customer log-ins with multi-factor authentication and improve your security. You can make your customers enter an OTP from an SMS and their phone number and passcode to prevent possible theft.
- Adopt Artificial Intelligence like machine learning to detect suspicious activity: some algorithms enable your platform to recognize odd activities by customers. AI can flag controversial purchases, regions, and foreign devices and request that users undergo extra security processes before completing the transaction.
- Utilize a fraud prevention software
Fraud detection and prevention software is designed to scrutinize, manage and block fraudulent activities on your account. It generally prevents fraudulent transactions processed with stolen credit card details. Most organizations rely on fraud prevention software and tools to confirm user Identities.
How To Check If Someone Is Using Your Identity
You can certainly say if your identity is being used by someone else, but you can check a few various areas that could indicate it.
- Track your bills
Note the bills you owe and when they’re due for payment. If you stopped getting notifications on bills you usually receive, it could indicate that someone has altered your billing address. It’s a red flag.
- Check your bank account statements
Check your bank account statements regularly. When you notice any strange purchase, it can mean that someone has stolen your identity.
- Review your credit reports
Also, keep records of your credit reports from all three credit-reporting bureaus. Your credit score alone can’t guarantee whether your identity has been stolen. You need the complete credit records.
- Review bills
Someone may be manipulating your personal information when you receive new bills or fees for benefits you didn’t enroll for.
Wrapping Up Synthetic Identity Theft: How to Prevent It
Synthetic identity theft is profound and has posed a significant threat to financial institutions. It has resulted in significant losses to financial organizations around the globe.
Businesses have lost billions of dollars due to this kind of identity theft. Individuals, banks, and credit companies, to mention, are victims of synthetic identity theft.
It is essential for businesses to go beyond traditional fraud detection techniques.
Small businesses can also educate their customers on data safety by employing anti-fraud Software that can help them prevent these fraudulent actions of Synthetic identity thieves.
Martins Favour is a creative content writer with over five years of experience writing SEO content for various brands. She finds a home in weaving worlds out of words. Stories are her life, and LinkedIn is her favorite tool.