New Form of Identity Theft Amid COVID-19

By Lynn A. Ferraina, Advisor

Over the past months, all of our lives have been upended by the pandemic, and we have had to adjust our daily routines and behavior to limit our exposure. Now, almost everything we do, from work, school, shopping, and social activities is online. While this makes commutes much more manageable, it also provides more opportunities for cybercriminals to target you and your family.

Fears of the pandemic and confusion about stimulus checks sent to millions of Americans have created new opportunities for scammers.  The Federal Trade Commission says it received four times as many complaints about identity fraud in the first few weeks of April 2020 than it had received in the previous three months combined.

Even more insidious is that the perpetrators of these cybercrimes will often target one of the most vulnerable individuals: children. In 2017, more than 1 million children had their identities stolen. This is often done through a type of fraud referred to as synthetic identity theft.

Synthetic identity theft is a type of fraud in which a criminal combines real and fake information to create a new identity. The real information used in this fraud is usually stolen. This information is used to open fraudulent accounts and make fraudulent purchases.

To better understand how to protect yourself and your family from this unique and dangerous type of fraud, it may be beneficial to first understand how it typically occurs. In most cases, synthetic identity theft happens when;

1. A fraudster purchases a social security number on the dark web. This could be obtained through a data breach or a loose piece of mail. Younger individuals are the ideal targets since most are not undergoing regular credit checks.
2. The social security number is then blended with a purchased identity and a false address and zip code. This allows the scammer to make it appear as if it is a real person.
3. Credit cards and accounts are opened under false identities. They may even apply for retail rewards programs and register the identity with open-source websites such as white pages. The goal is to trick the big-three credit bureaus (Equifax, Experian, and TransUnion) into believing they are a real person.
4. They will then purchase login info for someone else’s credit card, add the identity on the card as an “authorized user” and quickly build credit.
5. Finally, the scammer has created an entire synthetic identity that can be used to take out loans, open accounts, and transfer money wherever they wish. In some cases, scammers will put up to 25 of these “synthetic identities” on one credit card.

The complexity to these scams can be overwhelming and knowing that your children or grandchildren may be targeted is a frightening prospect, but there are ways you could help;

1. Don’t provide unnecessary information on forms. If asked to provide your social security number on a form, ask why it is needed, and what it will be used for. If the organization does not provide clear reasoning, opt-out.
2. Monitor your credit history as well as the credit history of your children closely. If you can, sign up your entire family for credit monitoring through a verified service. If there is any unusual activity, you can immediately notify your bank.
3. Properly dispose of old documents that contain personal information. Shred whenever possible and do a sweep of your home or office space to dispose of any unnecessary documents. 
4. If you are concerned about your child’s social security number or identity may have been compromised, you may want to consider freezing it until they reach legal age. Rules regarding this vary by state, so check your state’s laws regarding consumer report identity freezes.

If you have any concerns about the safety and security of your financial information you should discuss this with your advisor so you can work together to alleviate any concerns. 

Sources:

Doug Shadel, AARP Washington State Director Article: Digital Fromsteins. AARP the Magazine. June, 2020.

https://www.kiplinger.com/article/business/t048-c000-s002-another-epidemic-identity-theft.html

https://www.safety.com/synthetic-identity-theft/#:~:text=Keep%20your%20personal%20documents%20secure,in%20a%20lockbox%20or%20safe.

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