Synthetic identity theft involves the creation of an entirely new identity. An individual begins the synthetic identity theft process by taking a real Social Security number from someone who isn't using it. The "synthetic identity thief" then adds a fictitious birth date, name and address to the Social Security number.
Why do synthetic identities appear real?
The synthetic identity is then used to apply for fraudulent credit cards. However, before the individual uses the identity for this purpose, he or she must first create records that make the synthetic identity appear like a real person. This is achieved by adding the synthetic identity as an authorized user on an already-approved and working credit card.
An accomplice might agree to do this or it might happen to someone who doesn't know what's actually happening. Another way to make a false history for a synthetic identity is to use a credit-boosting company to temporarily add the identity to someone else's credit card.
When do the fraudulent purchases happen?
After establishing a credit history and credit score for a long period of time, the identity thief can then max out all the credit cards to their limits, never pay the cards off and later discard the synthetic identity. In some cases, it takes a long time for credit card companies to realize that they have been duped and that the person who is not paying his or her credit card bill doesn't exist.
Children are often the targets of synthetic identity theft
Often, minor children are targeted for the purpose of synthetic identity theft -- because they tend to have pristine credit and their credit reports are not being monitored. Thieves could break into a family home and steal a child's Social Security card for this purpose. Alternatively, an identity thief might guess random numbers and pass them off as valid Social Security numbers to credit card companies. This has proved troublesome to parents who later receive their baby's Social Security number, only to find that it has a credit history on it.