Synthetic identity theft: What it is and how to prevent it

What is synthetic identity theft? 

Synthetic identity theft is a type of fraud that involves stealing a real person's information, such as a Social Security number (SSN), and combining it with fake personal details (like a name, birthdate, address, and phone number) to build a new identity.

The fraudster then uses this made-up identity to open credit cards, apply for loans, or even rent an apartment. Because no single “real” person is fully impersonated, these crimes often go undetected for years.

In synthetic identity theft, the identity is part real, part fake, meaning it doesn’t typically raise immediate red flags. Credit bureaus may accept the new profile as legitimate, and the fraudster builds credit history slowly to avoid suspicion. Eventually, they “bust out,” maxing out credit lines and disappearing.

The calculated process of carrying out synthetic identity theft or synthetic identity fraud makes it harder to detect. And it's one of the reasons why this type of cybercrime is now considered the fastest-growing type of financial crime in the United States.

How does synthetic identity theft work?

Synthetic identity fraud or theft isn’t a smash-and-grab scheme. A lot of thought, planning, and waiting go into the process, which is what makes it so effective. Let’s take a look at a step-by-step breakdown of how it works:

1. The identity thief steals or purchases data from the dark web. Synthetic identity theft often includes real Social Security numbers, frequently belonging to children or people with limited credit histories.
2. They put together a fake identity. It will have a mix of real information and fake details like a made-up name, birthdate, and contact info.
3. They establish a credit file by applying for credit. The first few applications may be denied, but eventually, a credit file is created.
4. They slowly build up credit. Small loans or credit lines are opened, used responsibly, and paid off to build trust.
5. They carry out the "bust-out." Once a solid credit score is established, they rack up charges, max out credit lines, and vanish. This step leaves the fabricated identities to collapse and creditors scrambling to recover the losses.

Two main types of synthetic identities exist:

• Manipulated synthetics. This would be a real identity that’s slightly altered. For example, it happens when a cybercriminal is using your actual SSN but changes the name, address, or other details. These identities are harder to detect because the changes seem minor, making the fraudster appear legitimate.
• Manufactured synthetics. Cybercriminals build these identities by combining pieces of information from real people. For example, these identities often rely on unused SSNs (like those of children). Such fraudulent identities may have one person’s address, another’s SSN, and a third person’s name. 

Who is typically targeted by synthetic identity theft? 

The people most at risk are those who aren’t actively using their identity or monitoring their accounts, because this makes the fraud less likely to be spotted. Here are the types of individuals who are most vulnerable to synthetic identity theft.

• Children. They have clean credit histories and don’t monitor their credit, making them ideal targets.
• Elderly individuals. Seniors may not use credit often and could miss warning signs. Their SSNs can be stolen from medical records or public databases.
• Immigrants and undocumented individuals. Their personal details are often reused or mimicked to fabricate identities.
• Deceased individuals. A type of fraud known as “ghosting” involves using SSNs of the deceased to create synthetic profiles.
• People with thin credit files or who do not have much credit history. College students, new credit users, or anyone with minimal financial history are vulnerable because credit monitoring systems often don’t flag low-activity profiles.

According to the KPMG, synthetic identity fraud’s most common victims are children. Fraudsters often use stolen numbers to create credit profiles that appear legitimate, then exploit them over months or even years. Some synthetic identity theft examples include:

• A fraudster applying for a credit card using a child’s SSN and a made-up name.
• A fake identity renting multiple apartments before defaulting on rent.
• A fraud ring using dozens of synthetic identities to open loans and credit cards or even claim tax refunds.

If you're a parent, caregiver, or someone who hasn’t checked their credit in a while, you need to stay alert with an identity theft protection service. NordProtect’s 24/7 dark web monitoring and credit alerts allow you to detect suspicious activity before it snowballs into financial loss.

How does synthetic identity theft differ from other forms of identity theft? 

Traditional identity theft involves stealing and using someone’s full personal information (like name, date of birth, and Social Security number) to impersonate them. In contrast, synthetic identity fraud involves creating a new, fictional identity by combining real and fake details. As a result, this type of fraud is more difficult to identify and even harder to trace. Let’s take a look at how it stacks up against other common types of identity theft.

• Traditional identity theft: Someone steals all your personal information and pretends to be you. 
• Medical identity theft: A fraudster uses your personal details to get medical care, prescription drugs, or health insurance.
• Tax identity theft: Your Social Security number is used to file a false tax return and claim a fraudulent refund. Victims often only find out when they try to file their own taxes.
• Business identity theft: A scammer poses as a legitimate company to open new lines of credit, apply for loans, or defraud customers and suppliers.

Cybercriminals behind synthetic identity theft cases don’t just hijack your identity, but they build a new one from it. Since these cases unfold slowly, they often fly under the radar, especially without the help of credit monitoring or identity theft protection services.

Synthetic identity theft warning signs 

With synthetic identity theft, traditional red flags like suspicious transactions in your personal accounts may not appear right away. However, that doesn’t mean the signs aren’t there. Common signs that might indicate synthetic identity fraud include:

• You receive credit card or loan offers under a name you don’t recognize. This situation is often the first clue because it means a credit profile may already exist using your SSN.
• Debt collectors contact you about accounts you don’t recognize. This often happens after the fraudster has “busted out,” leaving behind unpaid bills tied to your SSN.
• Your child receives mail or credit offers. Children typically shouldn’t have credit files. So, if they’re getting credit offers or financial mail, it’s worth investigating.
• You spot errors or unusual entries in your credit report’s personal section. For a full guide on this, check out our article on how you can spot identity theft by looking at the personal section of your credit report.
• Unusual card activity, especially at unfamiliar bank terminals or online locations. Such card activity can be a sign that a credit card skimmer has captured your information and that the stolen details were used to build a synthetic profile.

What to do if you’re a victim of synthetic identity fraud 

Finding out you’ve fallen victim to synthetic identity fraud can feel overwhelming. But acting quickly makes all the difference. 

1. Get a copy of your credit report from all three major bureaus. Visit AnnualCreditReport.com and download your reports from Equifax, Experian, and TransUnion. Look for accounts, inquiries, or personal information you don’t recognize.
2. Report the fraud to the Federal Trade Commission (FTC). Go to identitytheft.gov and file a report. The FTC will generate a recovery plan and official documentation you’ll need for creditors and credit bureaus.
3. Place a fraud alert on your credit file. Contact one of the three credit bureaus (Experian, TransUnion®, or Equifax) and request a fraud alert. This step makes it harder for new accounts to be opened in your name. The bureau you contact is required to notify the others.
4. Freeze your credit. A credit freeze blocks new creditors from accessing your file. If you’re a NordProtect member, the service can provide credit freeze assistance, directing you to TransUnion® to initiate the process. Important: Freezing your credit with TransUnion® does not automatically freeze it with the other two major bureaus (Equifax and Experian). For full protection, you’ll need to place a freeze with each bureau separately.
5. Contact every lender or company involved. Notify the businesses where fraudulent accounts were opened. Ask them to close or freeze the accounts and provide you with documentation for your records.
6. Dispute incorrect information with the credit bureaus. Send a formal dispute letter along with copies of your FTC report and any supporting documents. Request removal of fraudulent entries.
7. File a police report (if required by lenders or insurers). Some companies may request a report for legal purposes. Bring your FTC affidavit and any evidence with you.
8. Use NordProtect’s identity theft recovery feature. If you currently have an active NordProtect subscription, you may be eligible for up to $1 million in coverage for qualifying identity theft recovery costs, which include document replacement, legal fees, and lost wages. You’ll also be assigned a dedicated identity restoration case manager to help you reclaim your identity step by step. This benefit is subject to a $100 deductible.

How to prevent synthetic identity theft

While synthetic identity fraud is hard to detect, it’s not impossible to prevent. These proactive steps can significantly reduce your risk and help you prevent synthetic identity theft:

• Monitor your credit regularly. Check your credit reports at least once a year, or ideally more often, if possible. Watch for unfamiliar names, accounts, or details that seem out of place.
• Freeze your child’s credit. Children’s Social Security numbers are prime targets. Contact each credit bureau to create and freeze your child’s credit file until they’re old enough to use it.
• Be cautious with your Social Security number. Only share your SSN when it’s absolutely necessary. Always ask why it’s needed and what measures are in place to keep it protected.
• Limit what you share online. Avoid posting personal info like your birthdate, address, or phone number on social media. Keep your profiles private.
• Use strong, unique passwords for every account. Reusing passwords makes it easier for fraudsters to gain access to your accounts. Use a secure password manager if needed.
• Set up credit alerts. NordProtect’s credit monitoring services can notify you right away if suspicious credit activity is detected, which may indicate the risk of identity theft, such as new accounts or hard inquiries.

By following the tips above, you reduce the risk of falling victim to synthetic identity theft and protect yourself from potential escalations, like cyber extortion. For added peace of mind,NordProtect is a comprehensive identity theft protection service that helps you detect threats early, respond quickly, and recover confidently.