You've heard of identity theft. Someone gets ahold of your name, date of birth, address, maybe some assorted other information, and of course your Social Security number. They use this information to open new credit accounts, wring all possible cash from those credit lines as quickly as possible, then move onto the next victim. Meanwhile, lenders and the credit bureaus believe YOU did all that, at least until you clear your name, which can take a lot of time and effort.
But have you heard of Synthetic Identity Theft?
This type of fraud starts with a real Social Security number, but pairs it with other information fabricated by the identity thief. So you might end up with your SSN being used with someone else's name, a different address, DOB, and other details. Since the information, taken as a whole, is not linked to any real person, it makes this type of identity fraud very hard to detect.
Thieves also use this synthetic identity differently. Rather than quickly opening new credit lines, draining them, and moving on, they might establish a longer relationship with a financial institution over months, even years, using the accounts legitimately to build credit and good standing before making the final withdrawal. They may even commit "fraud" on their own synthetic identity, and attempt to get reimbursed for the "loss" before making their final move. The difficulty in identifying a victim buys them time.
Of course, eventually all that activity is linked back to the one piece of information that is real: the victim's Social Security number. Someday, the bills and collection calls start rolling in. The problem for the thieves, of course, is that a "used" SSN already attached to a credit history might raise red flags if it appears in a credit pull (when the creditor checks the applicant's report) with a completely different name attached. This can result in the new account not being opened. This makes people with no credit history attractive targets for synthetic identity theft. And this makes children particularly lucrative potential victims. Not only do they have no credit history, if the identity thief gains access to their SSN early enough, it may be many years before the victim is even old enough to apply for credit.
When you're checking your own credit report for unusual activity (at AnnualCreditReport.com), it's important to also check your children's reports as well, essentially to make sure no credit lines are currently open under their Social. Be sure to report anything suspicious. You don't need your or your children's credit score, just the report itself to make sure there are no unauthorized accounts.
