Tommy Maenhout/Hemera/Thinkstock(NEW YORK) — Identity theft has been an ever-growing problem, but authorities say there is a new twist on an old problem for us to worry about: Synthetic identity fraud.
“Synthetic identity fraud is when the fraudster uses one true piece of your identity… and then combines it with fake information, so perhaps a different name, a different date of birth,” said Eva Velasquez, the CEO of Identity Theft Resource Center.
By some reports, synthetic identity fraud now accounts for 85 percent of all identity fraud in the United States, costing an estimated $2 billion a year, according to investigators.
“The scope can vary and there are some very large fraud rings,” Velasquez said. “Particularly when they’re using online platforms, they can affect tens of thousands if not hundreds of thousands of people.”
Investigators say that one form of synthetic identity fraud started with the sale of CPNs, or Credit Profile Numbers, by credit repair companies.
“A CPN is a multi-digit number that looks very similar to a social security number,” said Major Don Woodruff of the Duluth Police Department in Duluth, Georgia. “And it what’s given to people by these credit card repair companies for them to go out and open up new accounts.”
To see how it works, two ABC News Nightline producers visited one credit repair company in Baton Rouge undercover and posed as consumers, while they secretly filmed the meeting on hidden camera.
The owner offered to sell our producers a CPN, and said it was a replacement for a social security number. He also told them they could use it to open up new credit cards, after advising them to alter their addresses. This then creates a new profile in the eyes of credit card companies, now unable to link the customer with their old social security number and, presumably, bad credit.
The Electronic Transactions Association, a trade group made up of credit card issuing banks, says “consumers that choose to place one of these CPNs … (or another fake nine-digit number) on a credit application will be committing a federal crime, “ adding that “our member companies detect and deter crime everyday through security technology built to prevent fraud and insulate consumers from liability.”
When asking about CPNs, the owner told our producers, “We build them.”
“We go into the system, we apply for this new credit profile through the Social Security Administration,” he said.
For a fee of $350, he told our producers he would sell them a CPN, but there was a catch, saying, “You use an address that you’ve never stayed at before, because any address you’ve stayed at is associated to your personal credit.”
“It’s 100 percent legal, we go to the FBI,” the owner continued. “I always tell people to go and do your research, go do your research. Some people say CPNs are illegal. The only reason they say they’re illegal because a lot of stuff comes up as fraud because a lot of people don’t know how to use them.”
But the Social Security Administration told ABC News that under no circumstances do they issue CPNs. Robert Feldt, an agent with the SSA also added that “despite what many of these credit repair websites imply… CPNs are not legal.”
The FBI also confirmed to Nightline that they do not issue CPNs and know of no government agencies that do, which leads to questions about what so-called “CPNs” actually are.
“CPNS are basically just numbers that are sometimes made up,” said Major Don Woodruff. “It could be that they give you a CPN that is actually is a social security number of someone that’s not you.”
Authorities say social security numbers that have not yet been issued to anyone can be found through flaws in certain government websites, and that synthetic identity fraud can go undetected because credit card companies rarely investigate to see if the number and the person’s name match when someone goes to open new credit.
“When the credit card companies are assuming the liability of these fraudulent charges, they do have to recoup that money in some way,” Eva Velasquez said. “That generally translates into higher fees and higher interest rates.”
When Nightline confronted the owner, he told us he gets the CPNs legally from an independent agency and has done nothing wrong.
To prevent falling prey to synthetic identity fraud, Velasquez said people should be on the lookout for red flags.
“When they are looking to do business with a company, they should do their homework, and look to third party verification services, such as the Better Business Bureau,” she said. “We always say anybody that’s offering an immediate clean up and immediate fix, that’s a big red flag.”
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