A data breach occurs when an unauthorized person gains access to sensitive, confidential, or protected information. This information can include but is not limited to credit card numbers, social security numbers, driver’s license numbers, medical records, and bank account information. When this type of information falls into the wrong hands, it can be used to create a synthetic identity.
A synthetic identity is a fraudulent identity that uses a combination of real and fake information. The goal of creating a synthetic identity is to establish creditworthiness so that the fraudster can take out loans, open lines of credit, and even get a job—essentially commit financial fraud.
In this blog post, we’ll discuss how data breaches lead to synthetic identities and what steps property managers can take to protect their residents from becoming victims of this type of fraud.
How Data Breaches Lead to Synthetic Identities
As we mentioned above, a data breach occurs when an unauthorized person gains access to sensitive information. This information is then sold on the black market where it can be used to create a synthetic identity.
One way that fraudsters create synthetic identities is by using stolen social security numbers (SSNs) to apply for credit cards and other lines of credit. With access to these lines of credit, they can rack up debt in the victim’s name and then default on the payments, ruining the victim’s credit score. In some cases, the fraudster will use the victim’s information to open new utility accounts or even get a job—all without the victim’s knowledge or consent.
Another way that data breaches lead to synthetic identities is by combining real and fake information to create a new identity. For example, a fraudster may use their own name but pair it with a made-up birthdate and address. With this new identity, they can apply for credit cards and other lines of credit—and again rack up debt in someone else’s name.
The Impact of Synthetic Identity Fraud on Property Managers
Synthetic identity fraud can have a significant impact on property managers—especially if the property manager requires their residents to undergo a background check before moving in. That’s because as part of the background check process, property managers typically pull residents’ credit reports. If a resident has been the victim of synthetic identity fraud, their credit report will reflect this and they may be denied rental approval as a result.
What Steps Can Property Managers Take To Protect Their Residents From Synthetic Identity Fraud?
Fortunately, there are steps that property managers can take to protect their residents from synthetic identity fraud:
1) Educate your residents about data breaches and how they can lead to synthetic identities: As we mentioned above, one way that fraudsters create synthetic identities is by using stolen social security numbers (SSNs) to apply for credit cards and other lines of credit. By educating your residents about data breaches and how they can lead to synthetic identities, you can help them protect themselves from becoming victims of this type of fraud.
2) Require your residents to undergo regular credit checks: Another way that you can protect your residents from synthetic identity fraud is by requiring them to undergo regular credit checks—preferably every six months. This will help you catch any red flags early on so that you can take appropriate action
3) Pull your residents’ credit reports yourself: In addition to requiring your residents to undergo regular credit checks, you should also pull their credit reports yourself on a regular basis—preferably every six months as well. By pulling your residents’ reports yourself, you can avoid any potential delays that might occur if you were waiting for your residents to provide you with their reports. And if you do find any red flags, you can take appropriate action right away rather than waiting for your resident to discover the issue themselves.
4) Use a Resident Shield plan: Resident Shield is designed specifically for property managers who want to protect their residents from becoming victims of identity theft—including synthetic identity fraud. With Resident Shield in place, you can rest assured knowing that your residents are protected against this growing threat. Contact us today for more information about our Resident Shield plans!
5) Have all applicants sign an “Identity Theft Protection Acknowledgement Form” prior to moving in: Finally, another way that you can protect your residents from synthetic identity fraud is by having all applicants sign an “Identity Theft Protection Acknowledgement Form” prior to moving in which requires them to acknowledge that they understand the risks associated with sharing their personal information with others—including potential landlords or property managers. This form also requires applicants to agree not hold you responsible should they become victims of identity theft while living at your property.
While there’s no guarantee that your residents will never become victims of synthetic identify fraud—or any other type of identity theft for that matter—taking steps like those outlined above will help reduce the risk significantly!