Synthetic identity theft is when criminals steal personal information like a driver’s licence number, and combine it with fabricated personal details to create a new identity.

Highlights:

• Synthetic identity theft is when criminals steal personal information like a driver’s licence number, and combine it with fabricated personal details to create a new identity.
• Fraudsters use synthetic identities to open bank accounts and take out loans, often without detection for long periods of time.
• To protect yourself from synthetic identity theft, monitor your credit report, use strong passwords and be cautious of phishing scams and what you share online.
   

What Is Synthetic Identity Theft?

Synthetic identity theft is a type of fraud where criminals use stolen personal information to construct new, fake identities. 

Just as ‘synthetic’ means something made artificially to copy a natural product, a synthetic identity combines fake and real personal information. Sometimes these identities are entirely fictitious, mixing a name, address and driver's licence number that don’t even belong to any real person. 

Criminals use synthetic identities because they can often fool identity verification checks, making it easier to open accounts and access credit. These false identities can go undetected for years, leading to long-term damage.

What is an example of a synthetic identity?

One of the ways a fraudster might create a synthetic identity is to steal real personal information, like a tax file number from the dark web, and pair it with a made-up name or date of birth. They could also alter stolen information to form a new identity or create one that’s entirely fake. 

Unlike identity theft, where a criminal uses your real identity, synthetic identity fraud creates a completely new identity. With AI and deepfakes, these fabricated identities are becoming more convincing, blurring the line between real and fake.

What is the crime of fake identity?

Criminals use synthetic identity theft to commit financial fraud, such as obtaining loans or opening bank accounts and credit cards. Fake identities have also been used to apply for government benefits, open utility accounts and file tax returns. 

Fraudsters and criminal rings often use synthetic identities to store laundered funds and hide their true identity from authorities. Over time, they can build up creditworthiness, take out substantial loans or run up credit card balances - then vanish.

Who is most likely to be a victim of synthetic identity theft?

Anyone can fall victim to synthetic identity theft. Fraudsters might get your personal information through a data breach, a scam such as phishing, or purchasing stolen details from the dark web.

Even though the identity is fake, the fraudulent activity of the criminal is still tied to your credit report if they have used your personal information. Your credit score can be negatively impacted because of the payment history associated with your accounts or the increase in credit enquiries. Elderly individuals who rarely check their credit reports are especially vulnerable.

In cases where the synthetic identity is entirely made-up, there may not be a real victim, allowing criminals to go undetected for long periods while stealing or laundering money.  

How to protect yourself from synthetic identity fraud

While synthetic identity fraud may seem difficult to stop, your best defence is to be proactive:

• Monitor your credit report: Regularly check your credit report for unusual activity and keep an eye on your credit score for unexpected drops. Services that offer credit monitoring can alert you when someone tries to open new credit in your name. You can check your credit history for free once every three months from Equifax, or subscribe to our Equifax Credit and Identity Protect services to monitor activity in your credit report and send alerts for any changes including credit enquiries and applications made under your name. 
   
• Engage an identity protection service: Identity protection services can determine whether your personal information is being traded on the dark web. If you choose an Equifax plan that includes Norton™ dark web and social media monitoring you will be notified if your personal details appear on the dark web or suspicious activity occurs in your social media accounts.
   
• Use strong passwords and enable two-factor authentication: Protect your online accounts by using unique, strong passwords and enabling two-factor authentication. Using the same passwords for years and across multiple sites can open the risk of your data and identity being stolen.
   
• Be cautious about phishing scams: Watch out for suspicious emails, texts or phone calls asking for personal information. Fraudsters often use phishing to collect data for synthetic identities.  Phishing scams can come in the form of communications from seemingly legitimate financial institutions or government agencies. A good rule of thumb is to first check carefully for incorrect or missing information, such as your name and account number, and misspellings or character substitutions in the phone number or email address. Clicking on any hyperlinks in a phishing scam could lead to malicious software being installed on your computer that can access information saved on your device and record your keystrokes.
   
• Limit what you share online: Be careful about the personal information you post, like your location, daily activities, or sensitive details. Review your privacy settings to control who sees your posts. Identity thieves only need one piece of your personal information to help piece together a synthetic identity.
   

What to do if you’re a victim of synthetic identity theft?

If you suspect your personal information is being used in a fake identity, report it to IDCARE, Australia and New Zealand’s national identity and cyber support service. Contact your financial institution’s fraud departments to block your accounts, and review any linked accounts or automatic payments.

Next, reach out to one of Australia’s three national credit reporting bodies to report unauthorised accounts. They can notify the other two credit bureaus for you. Request a ban to be placed on your credit report to temporarily prevent lenders from issuing credit without your written permission. This free service won’t impact your credit score. 

You should also file a police report that you can use to support your submission to remove fraudulent information from your credit report. If you have identity theft insurance, it may help cover the costs of restoring your identity. With Equifax Credit and Identity Protect plans, you can access up to $15,000 insurance with Identity Guard¹.

Having your personal information stolen makes you vulnerable to other types of fraud so it is important to change your passwords across key accounts such as bank accounts, emails and social media. 

Stay safe, and remember: protecting your identity is the first line of defence against synthetic identity theft and other types of fraud.
 

¹ Terms, conditions, exclusions and limitations apply. Click here to view the Identity Guard Insurance Policy Information Booklet

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.