Crafting an identity essentially out of thin air: It sounds almost make-believe, but as banks and credit card companies scramble to develop safeguards against the forever-advancing means of what experts deem "true identity theft" - the classic hijacking of another person's name or financial information - it's become the fraudster's near-foolproof alternative.
"Synthetic identity theft," as it's called, accounts for nearly 85 percent of the more than 16 million ID thefts in the United States each year. It's carried out by "borrowing pieces of information from multiple people, or creating pieces of new information," said Andrew Gerry, senior vice president of operations for the identity risk management company, Intersections, Inc. "So, your Social Security number combined with an address and a different date of birth or a different location."
Anne Wallace, president of the Identity Theft Assistance Center, said the only legitimate piece of information a criminal needs is an address: "It can be anybody's address, but ideally it's somewhere the crook can retrieve documents associated with the account they've made up," she said. "Really the rest of the elements of this identity can be fabricated."
The Federal Trade Commission flags one example as a cautionary tale: In 2007, an Arizona man with a fraud alert on his account ran a credit check and discovered his Social Security number had been used to manufacture identities in over 30 cases - once to score $9,000 in credit under the "Meet the Parents"-inspired moniker, "Gaylord Focker."
"I'm not sure there are people actually reading the applications on a daily basis; a lot of it is computer-automated," said Kathryn Searles, an inspector with the U.S. Postal Inspection Service. "They're not necessarily looking for a certain type of name, they're looking for a credit pattern. So it's quite possible that names such as 'Gaylord Focker' could slip through the cracks, and a credit card would be issued."
But it typically starts with a pre-existing Social Security number - which makes kids exceptionally vulnerable.
"It is probably much more lucrative and attractive to criminals to use a child's Social Security number, simply because they have a blank slate for credit," explained Searles. "And they usually don't have a pre-existing profile in the credit reporting companies."
What's more, since young victims don't usually check their credit scores until they're applying for a student loan or their first credit cards, "all of a sudden [they] discover that someone's been using that Social Security number, or their name, or something like that, for years," Gerry said.
Registration forms for schools, sports leagues and doctors' offices often demand a minor's Social Security number. Searles said the USPIS once worked a case in which "a woman who worked in a medical clinic was selling the profiles of the children who came in for treatment."
That's why, she went on, "it's really important for parents to ask questions: Why do you need this information? How long will you be storing it? Who will have access to it?"
Gerry said more often than not, this specific type of crime isn't just "mom and pop," but is "really being done by organized crime - international crime rings, gangs, things like that." Wallace agreed synthetic ID fraudsters tend to be "very intentional": "This is a business," she said. "You and I get up every morning and go to work; we have a job, we know how to do it. They know how to do their job, too."
Still, where children are involved, it's alarmingly common that the predator is a family member or guardian, particularly in foster homes.
"Whether my credit's now bad and therefore I can't get a loan or I can't get a job, they use the Social Security number of a minor they can find to essentially create a synthetic identity," Gerry said. "Because it's there, and they have access to it."
Banks and credit card companies have practices in place that freeze accounts and notify the customer of suspicious activity. But in the event of synthetic ID theft, "there's no real person who's going to actually catch the fraud and say, 'Hey, this is my identity; stop using it,'" Searles said.
But what makes synthetic identities even more elusive is that because they generally only establish "sub-accounts" on an individual's Social Security number, the actual victims of the crime generally escape unscathed. The real hurt is felt by the duped financial institutions, as well as the customers who are hit with fees as they try to offset their losses.
"We have this balance going in the economy where people who want access to easy credit, and they want to be able to do it quickly and easily," Gerry said. So "at the end of the day, if they did everything possible [to prevent fraud], it would be very hard for you as a consumer to get credit."
Searles said agencies like hers are working with federal and local law enforcement, banks and credit reporting agencies to develop tools sophisticated enough to counter the increasingly popular synthetic identity theft.
"It's definitely a war," she said. "And there is sophistication on both sides. It's the big fight - it's like a cat and mouse game."