By Greg Wright
MBA, CFE, CFP®, CLU, ChFC
Certified Fraud Examiner
Certified Financial Planner™
Synthetic identity theft has become the predominate form of U.S. identity theft. When this growing fraud meets your medical records, it could impact both your pocketbook and your health. It could even harm your health.
Most of us think that identity theft is when someone uses our Social Security number, name and date of birth to get a credit card, borrow money or buy things. The cost, time and pain associated with correcting this fraud may be painful. However, synthetic identity theft may be worse.
Synthetic identity theft is when a fraudster uses your Social Security number and a different name and even a different date of birth. This type of fraud can continue for years and even decades without your knowledge.
In my lectures on fraud, I call synthetic identity theft an “electronic home invasion.”
Synthetic identity theft can result in what’s known as a fragmented credit file. When an identity thief uses a real Social Security number and a different name, it’s possible for the synthesized identity to become associated with the real credit file under the same Social Security number.
The same thing may happen with your medical records file. The medical information exchange organization may not know which is real and which is synthetic. Hospital records too. Ouch.
Often the fraudster – say an illegal immigrant -- uses your Social Security number to get a job and then signed up for employer-sponsored medical insurance.
Following an illness or surgery, the medical diagnoses information may be transferred by the insurance company to the MIB Group (formerly known as the Medical Insurance Bureau). The MIB Group Inc. is an insurance "information exchange" organization founded in 1902 that is not unlike a consumer rating agency (e.g. Experian).
The MIB receives consumer medical information from insurers that might impact health, long-term care, life, and other insurance underwriting. Insurers use the information to decide if they will cover you and issue health or life policies on you, and how much you should pay.
Similarly to consumer credit files, medically related account numbers may be associated with that file due to partial matching. In this way, the consequences of synthetic identity theft can be a lot more challenging to alleviate than those of true name identity theft.
While people who experience true name identity theft can have false or unauthorized credit accounts tied to their credit reports; synthetic identity theft victims can have entire identities (credit and medical) tied together.
Victims are often older and younger citizens. These individuals typically are less apt to seek credit or change medical insurers. Synthetic identity fraud can continue for years – even decades – without being discovered until it results in catastrophic results. For example, when the younger victim applies for college admittance, applies for student financing, or the older American tries to change his/her Medicare Supplement or get a “reverse” mortgage.
About one-third of American’s Social Security numbers are being used by someone else without our permission.
Recently, I was asked by a CPA friend (male) to check to see if anyone was using his Social Security number. I found a female individual that had used it to gain employment with a Pennsylvania manufacturer. Based on the background research report, it appears that the person is an illegal immigrant. I’ll bet ya that she has health insurance from her employer!
To avoid becoming one of a growing number of Americans that are victims of synthetic identity theft, frequently check your Social Security statements, consumer rating agencies reports, etc. Also, you can check with the MIB Group to see if they will let you look at your medical file.
For a more complete roadmap to ID theft prevention, attend one of my free public lectures on how to avoid identity theft.