Synthetic Identity Fraud: Meaning and Prevention

Synthetic identity fraud is different from someone simply stealing your identity, it blends real details like your PAN with fabricated information to build an entirely new, false identity, one that can quietly open accounts or take loans in a way that eventually shows up on your credit report, not your bank statement.

• You might not notice until you check your credit report. Unlike a stolen card or account takeover, this kind of fraud often surfaces only as an unfamiliar enquiry or account you never applied for, regular credit report checks are how most people actually catch it.
   
• Don't pay off an account you don't recognise. If a fraudulent account appears on your report, paying it to "clear" the listing doesn't fix anything, and may make disputing it harder, verify and dispute first.
   
• You have two separate tracks to pursue. Reporting to the lender and raising a CIBIL dispute are both necessary, one doesn't substitute for the other, each investigates a different part of the problem.
   
• Genuine personal information doesn't have to be stolen to be misused. Details obtained through a data breach, phishing, or even careless sharing can all feed into building a synthetic identity, not just information taken directly from you.

Synthetic identity fraud occurs when a fraudster combines genuine personal information with fabricated details to create a false identity for financial or other fraudulent purposes. Unlike traditional identity theft, which typically involves impersonating an existing person, synthetic identity fraud creates an identity by mixing real and invented information. For example, a fraudster may use genuine details such as a PAN or other identifying information belonging to one person and combine them with a false name, address or contact details. The resulting profile may appear credible during certain application or verification processes. Synthetic identities can be used to apply for loans or credit cards, open financial accounts, build a credit history, obtain products or services on credit, or carry out unauthorised transactions. The misuse may remain unnoticed until the genuine individual discovers an unfamiliar credit enquiry, account, application or transaction linked to their personal information. Reviewing financial records and promptly reporting unexplained discrepancies can help identify possible misuse early.

How does synthetic identity fraud work?

Synthetic identity fraud generally develops by combining genuine information with fabricated details and gradually establishing credibility. The exact method varies, but the process may involve several stages.

1. Collecting genuine information: Fraudsters obtain personal information through sources such as phishing, data breaches, social engineering or unauthorised disclosure.
2. Combining information: Fraudsters combine genuine details with fabricated personal information to create a new identity.
3. Applying for financial products: The synthetic identity may be used to apply for credit, loans or other services.
4. Building credibility: Some fraudsters may use the identity over time to establish a financial history before attempting a larger fraud.
5. Using the available credit: Once credit is obtained, the fraudster may use the funds or credit facilities and subsequently stop making payments.

The RBI has identified indicators such as multiple applications associated with the same device or IP address, repeated use of an Aadhaar number across identities, and several applicants sharing contact or address information as possible warning signs for financial institutions.

What should you do if synthetic identity fraud affects your credit report?

If your credit report contains an account or enquiry that you did not authorise, report it to the concerned financial institution and raise a CIBIL dispute where appropriate. Taking both steps helps establish that you do not recognise the account and allows the relevant institution to investigate the reported information.

Step 1: Contact the financial institution

Inform the lender or financial institution that you do not recognise the account or enquiry. Provide the information requested to establish that the account does not belong to you.
 

Step 2: Preserve supporting records

Keep your credit report, account details, emails, SMS alerts, complaint references and other relevant documents. These records can support the investigation.
 

Step 3: Raise a CIBIL dispute

CIBIL provides an online process to dispute inaccurate personal information, account information, and enquiries. You can submit the dispute through the relevant section of the CIBIL dispute process.
 

Step 4: Report suspected cyber fraud

If you believe your personal information was obtained or used through cyber fraud, report the incident through the appropriate government cybercrime reporting channels and provide the available evidence.
 

Step 5: Monitor your credit report

Continue checking your credit information for unfamiliar accounts or enquiries. Early identification can help you raise issues before additional financial activity is associated with your details.
 

These steps can help document the suspected misuse and start the relevant investigation. Keep your complaint references and supporting records until the matter is resolved, and continue monitoring your credit information for any further unfamiliar activity.

Limiting unnecessary disclosure of personal information and monitoring your financial records can reduce the risk of identity misuse. Share personal details used in financial applications only through verified channels.

Follow these precautions:

• Do not share OTPs, passwords, PINs or confidential banking credentials.
• Avoid sending identity documents to unknown individuals or unverified websites.
• Check your CIBIL report regularly for unfamiliar accounts and enquiries.
• Verify unexpected loan or credit communications through official channels.
• Keep your registered mobile number and email address updated with relevant financial institutions.
• Do not click unknown links requesting identity verification or financial information.
• Report suspected misuse of personal information promptly.
• Keep copies of important financial and identity-related records in a secure location.

CIBIL also recommends reviewing your credit history regularly and raising a dispute promptly when you identify inaccuracies or fraudulent activity.

Steps to raise a service request for an unrecognised Bajaj Finance account

If an unrecognised account or transaction on your credit report is linked to a Bajaj Finance service, you can raise a service request through the Bajaj Finance App or My Account portal, where the relevant option is available. Providing accurate details and supporting records can help facilitate the review.

Steps to raise a service request

1. Sign in: Log in using your registered mobile number and OTP.
2. Select the relevant service: Open My Relations and choose the relevant loan or service.
3. Open support: Go to Help & Support.
4. Raise a request: Select Raise Request.
5. Choose the category: Select the relevant account, loan or transaction-related category.
6. Provide details: Enter the requested information and attach supporting documents, where applicable.
7. Save the reference: Note the service request reference number for future communication and follow-up.

If an unrecognised account appears on your credit report, do not make a payment solely because of the listing. First verify the account details and raise the matter through official channels. Keep the request reference and supporting records until the issue has been reviewed and resolved.

What are the legal provisions related to synthetic identity fraud?

Synthetic identity fraud is covered by multiple offences or laws in India, and the applicable legal provisions depend on how the fraud was committed. The Information Technology Act, 2000 includes provisions on identity theft and cheating by personation using a computer resource. Section 66C of the Information Technology Act, 2000 addresses fraudulent or dishonest use of another person's electronic signature, password or other unique identification feature. Section 66D addresses cheating by personation using a computer resource or communication device. Whether these provisions apply to a particular synthetic identity case depends on the facts and evidence.

A person affected by suspected identity fraud should therefore:

• Report the suspected misuse to the relevant financial institution.
• Preserve documents and electronic evidence.
• Report suspected cyber fraud through the appropriate government channel.
• Provide information to law enforcement if an investigation is initiated.
• Dispute inaccurate credit information with the relevant credit information company.

Reporting suspected fraud does not guarantee a particular legal or financial outcome. Investigation, liability and any corrective action depend on the circumstances and applicable law.