Synthetic identity fraud is a method of identity theft in which criminals alter personal information for the purposes of gaining access to a consumer's credit card or banking information.
Criminals commit synthetic identity fraud by altering some aspect of a consumer's information. For example, a criminal might change a date of birth or a Social Security Number by one digit. The credit reporting agency recognizes that information as belonging to the consumer, but assumes a typographical error has been made in entry. Since it's common for these types of errors to occur, credit or banking accounts can still be granted or accessed using this faulty information.
Often synthetic identity fraud goes unrecognized because incorrect information is often stored in a separate (but linked) credit information account with the credit reporting agencies. Consumers often don't learn their identities have been compromised until they receive unpaid bills, collection notices, or overdue tax bills, or until they notice unusual postal mail patterns.