Synthetic Identity Fraud: How Fraudsters Fabricate Fake Identities

Imagine you receive phone calls from multiple banks claiming that your credit cards are maxed out and your bills are overdue. You know for a fact that you haven’t hit your limit this month and inform the banks. On receiving multiple phone calls, you ask for additional information only to find that your phone number and PAN were merged with another person’s identity to create an artificial persona through which unauthorized payments were made. This is a case of Synthetic Identity Fraud.

Your identity is your most valuable asset. It is the key that lets you vote, drive, transact, travel, pay taxes, and lets you be who you are. It is, thus, of utmost importance to safeguard this aspect of your life as you would safeguard any other precious item.

This blog delves into a type of fraud where fraudsters misuse your identity to steal your hard earned money.

What is Synthetic Identity Fraud?

In Identity Theft, a fraudster simply pretends to be you by stealing your persona but Synthetic Identity Fraud is a much more sophisticated modus operandi where criminals stitch together a mix of real and fake information to create a brand-new, fictitious person.

Fraudsters combine real pieces of identity information such as Aadhaar or PAN with fictional or unrelated names and an invalid or vacant address. The end result is a full identity that does not exist in the real world, but is able to trick financial systems into thinking it is a real customer.

How Synthetic Identify Fraud Works

Once a fraudster creates a fictional identity, they don’t use it immediately. Instead, they spend significant time creating legitimacy around it. Here’s how they go about it:

1. They start with a stolen PAN or Aadhaar number, often targeting people who don’t keep a tab on their credit, such as senior citizens.
2. They apply for small credit lines or store cards. Even if rejected, this creates a credit profile for the fake person.
3. They pay small bills on time to build a high credit score. They may even add their details as a co-joinee or authorized user on other accounts to inflate the trust factor.
4. Once the credit limits build to a desired peak, the fraudster maxes out every account and vanishes. 

Since the “person” who carried out the transactions never existed, banks are left chasing a phantom.

The real impact of the fraud is felt by the victims whose identities were stolen. If your ID was used as the anchor for a Synthetic Identity Fraud, you may not realise it for years. It is when you apply for a car loan or a student loan and it is rejected because your PAN is linked to huge amounts of “ghost debt” is when you learn that you were a victim of fraud.

How PhonePe Protects You

PhonePe uses both human and AI intervention in detection of such frauds. Synthetic identities usually behave like machines with repeated patterns and structure. PhonePe systems can easily identify such instances. Real users are connected to friends, family and merchants. When we see an account with no real-world links, it automatically raises a red flag. Our  KYC verification system doesn’t just read your ID, it looks for any manipulations, including micro changes to detect if a single digit or photo on a document has been digitally altered to create a synthetic persona.

How to Keep Yourself Safe

Here are ways to keep yourself and your family safe from falling prey to Synthetic Identity Fraud:

• Monitor Your Credit Health: Check your Credit Score regularly. If you see a loan or a credit inquiry you don’t recognize, it could be a warning sign that your ID is being used elsewhere.
• Protect Your Paperwork: Treat your Aadhaar and PAN very carefully. Never share photos of your IDs on unverified social media groups.
• Enable Biometric Locks: Go to your PhonePe settings and ensure Fingerprint or Face ID is enabled. This adds an important layer of security.

What to do if you’re a victim of Fraud

If you suspect you have been targeted by a scam, report it immediately. Every second matters.

Reporting on PhonePe:

• PhonePe App: Go to the Help section and raise a complaint.
• PhonePe Customer Care: Call 80-68727374 / 022-68727374.
• Social Media Reporting:
  • Twitter: PhonePe Support
  • Facebook: PhonePe Official
• Grievance Redressal: File a complaint at PhonePe Grievance Portal.

Reporting to Authorities:

• Cyber Crime Cell: File a complaint online at Cyber Crime Portal or call 1930.
• Department of Telecommunications (DOT): Report suspicious messages, calls, or WhatsApp /Telegram fraud via the Chakshu facility on Sanchar Saathi Portal.

Important reminder — PhonePe never asks for confidential or personal details. Ignore all mails claiming to be from PhonePe if they are not from the phonepe.com domain. If you suspect fraud, please contact the authorities immediately.