Synthetic identity theft is the use of someone's personally identifiable information (PII), which the thief combines with made-up details to create a false identity.
The thief may steal an individual's social security number, for example, and use it in conjunction with a false name and address. The thief typically creates fake businesses to provide the identity with credit and employment histories. Once the identity is established, the thief can use it to obtain credit and open bank accounts, usually for fraudulent purposes. Less frequently, thieves use the information to create new identities for themselves or to sell.
Synthetic identity theft often goes undetected. The person whose data was stolen doesn't usually also have funds stolen or credit charges made on their accounts because the thief opens new accounts. The thief accesses funds through these accounts, which are not connected to any actual person.
The direct victims of synthetic identity theft are usually the creditors. Indirectly, consumers suffer as creditor losses are passed on to them. According to experts, the vast majority of identity theft fraud is based on synthetic IDs.
To prevent synthetic identity theft, any organization that stores personally identifying information should ensure that all details match for any given unique identifier.