Synthetic identity fraud isn’t a new crime, but thanks to the relative ease of information access on the internet and gaps in the credit process, it’s increasingly on the rise. It’s clear that criminals use this method to fraudulently steal money and services, but that’s just stating the obvious. There are other costs to synthetic identity fraud that criminals rack up that are forced upon the victims.
Many social security numbers are garnered by widespread data breaches and sold to criminals. A great majority of these numbers are granted to children who will not use them until they are much older, by which point a synthetic identity fraudster will have devalued the account to the extent that the victim will have an uphill battle when attempting to use it for any reason.
For example, if a victim tries to apply for a student loan or to a job whose employer checks credit histories, they will find a history of malfeasance that extends back for years. Untangling this jumbled mess will require a herculean effort, right at the time when the affected person has no actual experience in such matters. This holds true for anyone who applies for credit, regardless of their background, whether they are a new applicant or someone trying to repair a bad credit history of their own making. The elderly and the homeless are also at risk for this kind of fraud.
Because the synthetic identity fraud process requires just one legitimate element, it can cause something called a fragmented file to be created at a credit agency. A social security number, being a legitimate element, might be connected to any number of illegitimate elements. At the moment of inquiry, a file is created at a credit agency, but because the file contains only one true factor, it’s fragmented. This means that the employed information may be connected to a number of erroneous accounts, each linked to the main credit files. Cleaning up this kind of negative data can take credit agencies months, or even years to resolve and clean up.
There’s also a trickle-up effect that occurs due to synthetic identity fraud. Given the amount of time and money it may take a credit reporting agency to remediate these kinds of crimes, it may cause the agency to increase its fees across the board, which could in turn make it more onerous for credit-seeking customers to go through the processes necessary to obtain credit.
The costs of synthetic identity fraud are more than simply monetary. Also at risk are trust, time and energy, the efforts of the innocent to reclaim what they’ve lost through no fault of their own. These are things worth protecting.
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