There is no shortage of ways people with bad intentions will try to commit fraud. The problem seems to compound with each passing year. Synthetic identity fraud, or “Frankenstein fraud,” is when someone steals an individual's Social Security number and combines it with information from other people's identities, such as a name, address or birth date. The newly created identity is then used to borrow money. Criminals will often target children or the elderly.
Synthetic identity fraud sounds scary, but there are steps you can take to mitigate how criminals can use your identifying data:
Freeze your credit reports
A credit freeze prevents creditors from accessing your credit reports, which means no one can open new lines of credit in your name. This includes you, unless your credit is unfrozen first with each of the major credit bureaus.
Since synthetic identity theft relies largely on stealing the Social Security numbers of kids and the elderly, one of the best ways to cut off that source is to freeze their credit too, though the process for freezing a child's credit is a bit more involved. Similarly, you can freeze your Social Security number to help prevent anyone from using it without your knowledge.
Check your credit reports regularly
If you don't freeze your credit reports, check them regularly for any suspicious activity. Be especially vigilant for the presence of any other names, addresses or employers connected to your credit file.
You can also sign up for a free credit monitoring, which will check the dark web for your personal identifiable information. You could also use an identity theft protection service to help automate checking your credit reports or to notify you if your data is leaked in a breach. You can also use AnnualCreditReport.com to get a free weekly credit report.
Watch out for phishing and social engineering attacks
If criminals can't get your Social Security number through a data breach or purchase it on the dark web, they can come directly to you and steal it through a phishing or social engineering attack. Criminals will try to trick you into revealing your Social Security number by pretending to be a bank, the IRS or the Social Security Administration.
While phishing tactics are growing more advanced because of AI, you can spot most of them if you remember to slow down and carefully read the email or text and scan it for typos or a sense of urgency that you must act quickly. If you receive an unprompted message from your bank, call the bank directly using a number on the bank's official website.
Protect any documents that include your Social Security number
While very few organizations will use your full SSN in communications, the full version will still be on things like tax returns.
So make sure you protect any printed copies, shred any copies you don't need, and delete any forms that might be attached to email communications with your CPA.
Check your Social Security statements
This can be done free through the Social Security Administration and will help you uncover if someone is using your Social Security number, or the number of one of your kids, to file for employment or benefits. You can request your Social Security statement here, and you can lock your number for added security.
To learn more about synthetic identity fraud, read the full article here.
This advice can help protect you from all types of fraud, so it is good to make these practices a habit. You should not live in fear, but it is best not to let your guard down where your identity and credit are involved. Knowing techniques you can use to combat fraud can give you peace of mind while leading to financial security.