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| The Basics | How thieves steal their own identities
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Identity thieves usually start with themselves, slowly altering their own data to bilk lenders. Here's how the crime can still hurt you.
By Liz Pulliam Weston
Everybody knows identity theft is a big issue, with an estimated 9 million victims in the U.S. last year.
What you may not know is that identity manipulation is an even bigger issue, at least for the businesses that wind up paying for fraud.
Identity manipulation comes in two basic forms:- People alter key details of their identities in order to distance themselves from prior misdeeds or fraud.
- People create entirely new identities in order to commit fraud.
In the first example, someone with credit problems might try to create a new file with the credit bureaus so that lenders can't detect past lapses. Likewise, someone who's had a checking account closed for bouncing checks, or who's been denied insurance for a pre-existing condition, might try to create a new persona free from those problems.
In the second example, fraudsters create new identities virtually from scratch -- although they may use aspects of their own identities as a starting point. In some cases, they carefully cultivate these fictitious personas over months or even years, building up their credit ratings and credit limits in anticipation of a big "bustout:" maxing out the credit lines and disappearing with the goods and cash.
Fabricated identities are useful to thieves
In fact, thieves are far more likely to use fabricated identities to commit fraud than they are to steal other people's true identities, according to ID Analytics, a fraud-prevention company that has created software to detect such "synthetic" identities. The company estimates 88.3% of all identity fraud cases use synthetic identities, which it believes are also responsible for 73.8% of the dollars lost by U.S. businesses.
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In a separate study, another fraud-detection company, Edentify, estimated that 2% of all non-credit account applications, such as those for opening checking and other bank accounts, involved manipulated identities.
People trying to escape their pasts might use IRS-issued taxpayer-identification numbers in lieu of Social Security numbers or alter their own numbers by a digit or three to evade detection. They often use mail drops or relatives' addresses instead of their own to put even more distance between their old and new identities.
These folks may justify their actions as a "fresh start," but what they're doing is committing fraud, said Maxine Sweet, spokeswoman for Experian, one of the three largest credit bureaus. (Experian, like the other bureaus, uses fraud software to spot taxpayer ID numbers as well as other suspicious data that can indicate identity manipulation.)
Altering Social Security numbers
More ambitious fraudsters conduct similar scams on a grander scale. To help establish false identities, thieves can buy lists of valid but often unused Social Security numbers from crooked Internet sites, or they can use what's known as "SSN tumbling," said Mike Cook, ID Analytics co-founder. That means starting with a Social Security number they know is real, then changing one digit at a time for each new persona.
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