You might be willing to loan a friend or family member a bit of money during hard times to help them recover from financial loss or the effects of a natural disaster. But would you loan them a piece of your sensitive personal information to enhance their financial footing?

One growing trend in cybersecurity fraud is the creation of synthetic identities — using pieces of personally identifiable information (PII) stolen from unsuspecting victims and meshing them together to fabricate a new singular identity. Those identities are then used for a variety of fraudulent activities ranging from opening new credit accounts or securing loans to applying for unemployment benefits.

Individuals are at an even greater risk of loss from synthetic identity fraud when PII is compromised. Discovering that your information has been stolen and used for fraudulent accounts can be difficult for consumers to remediate.

Identifying and stopping synthetic identity fraud is often hard for lenders due to the variety of PII available via online hacks and data breaches. Additionally, scammers can legitimize their false identity through patience and careful crafting of credit portfolios over extended periods of time.

To advance U.S. payments security, the Federal Reserve launched an initiative to raise awareness and encourage action on the growing problem of synthetic identity payments fraud. Their hope is to improve understanding of the issue, create a greater sense of urgency about addressing it and promote industry action to identify and mitigate this type of fraud.

Consumers play a key role in safeguarding their own information and keeping it out of the hands of scammers. Consider the following tips to protect your information:

  1. Monitor your credit report. Regular checks of your credit report can reveal unknown accounts or credit checks done in your name.
  2. Limit disclosing Social Security numbers (SSNs). Protect yourself and your family members by sharing SSNs only when absolutely necessary, particularly online.
  3. Limit what you share on social media. Like your Social Security number, names, birthdates or photos can also be used by fraudsters to piece together a synthetic identity.
  4. Report any suspicious activity or unknown accounts immediately to your financial institution.

Synthetic identity fraud is a growing scheme that costs consumers and lenders billions annually. In an online and mobile-driven world, it can be difficult to limit the amount of personal information available to scammers. But with collaboration on the part of banks, the government and ownership for responsible sharing of information on behalf of consumers, synthetic identity fraud can be mitigated.