Synthetic identity theft is the crafting of a new identity by melding bits of information from different people, or by mixing real people’s information with other information that is entirely made up.

It’s a sort of identity mashup.

Let’s say an identity thief wants to build a synthetic identity and starts with an imaginary name: Joe Ripoff.  Even imaginary people have to live somewhere, so he’ll give Joe Ripoff the address of the long-vacant house down the street. But what Mr. Ripoff really needs to become real is a Social Security number; can’t get credit without a Social Security number. Let’s say the identity thief gives him yours: 123-45-6789.

Now, when the identity thief applies for a credit card, the folks at the credit bureau are going to get a little confused because they can’t find a file for Joe Ripoff. But they’ll settle for the closest thing they have—the file with your Social Security number. And, voila, a new person exists in the form of a subfile attached to your credit record.

When those credit cards are finally issued they’ll become part of your credit record, too. And when the credit card bills go unpaid? You got it; those delinquencies are now your delinquencies. And it’s you the bill collectors are going to come after.

In a 2005 study, ID Analytics concluded that 74% of total identity theft losses to US businesses are actually attributable to synthetic identity theft.

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