‘Synthetic Identity Fraud’ Produces $20B Bonanza for Scammers
Incidences of scammers combining real Social Security numbers with mismatched or phony names to create new identities, known as “synthetic identity fraud”, have proliferated in the past few years, becoming the largest form of identity theft in the nation and accounting for an estimated $20 billion in losses in 2020.
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Incidents of scammers combining real Social Security numbers with mismatched or phony names to create new identities, known as “synthetic identity fraud,” have proliferated in the past few years, becoming the largest form of identity theft in the nation and accounting for an estimated $20 billion in losses in 2020, up from $6 billion fiuver years ago, reports Pew Stateline. Fraudsters have used synthetic identities to rip off the Paycheck Protection Program, designed to help people who had lost their businesses or employment due to the pandemic, as well as unemployment benefit scams and even to just buy cars or furniture.
Consumers who have had their Social Security numbers stolen can be affected, even years later, when they apply for credit, especially since the synthetic identity schemes steal Social Security numbers from people who aren’t using credit, such as children, recent immigrants or lower-income older adults who may not have credit cards. Meanwhile, a federal law enacted in 2018 designed to curb the problem has had little effect both because the financial institutions have been slow to enroll in the program specified by the law and because of challenges on how to define the term “synthetic identity fraud.” In addition, the law covers only the financial industry, not government benefits such as the COVID-19-related funds or unemployment insurance.
