Tuesday, October 30, 2007

Synthetic ID Theft

by Doug Pollack

The Wall Street Journal this week published an article on synthetic identity theft titled "The Borrower Who Never Was" (Christoper Conkey, October 29, 2007).

It describes how an identity thief named James Rose would create synthetic identities, those that appear real on paper, but were actually used by him in order to trick financial institutions into making loans or issuing credit cards.

"Working with a partner, Mr. Rose tricked the guardians of the credit system -- lenders and the three big credit bureaus -- into treating his fake identities as if they were real, creditworthy consumers. He obtained several hundred credit cards in the names of Mr. Gregory and as many as 500 other fake personas over two years, filching around $750,000 over a two-year period."

Unlike more common identity theft, synthetic identities are used primarily to defraud financial institutions without affecting individuals. Mr. Rose noted that their goal was to "make a lot of money without actually hurting people."

Despite protestations to the contrary, some feel credit bureaus aren't doing enough to deter identity theft. In the case of synthetic identity theft, it is the knowledge of credit bureau procedures that enable criminals to create and exploit synthetic identities. Evan Hendricks, editor of Privacy Times, notes that "the credit bureaus are at the epicenter of identity theft and there's no pressure at this point to force them to make changes."

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