Dealers at the raw end of auto loan scams have got to be a first. Follow along as we delve into this swindle involving Social Security numbers, credit privacy numbers, and something called synthetic identities.

Credit applicants in on the swindle are changing the last four digits of a Social Security number. The numbers belong to a living person. This creates what is known as a “synthetic identity.” It has caused an increase in Credit Privacy Number sellers, mainly in Southern California.

Why do dealers need a “credit privacy number” anyway?

A credit privacy number or CPN is a nine-digit number consumers use instead of a Social Security number. It is also called a consumer profile number, credit protection number, or consumer privacy number. It’s used to protect their privacy on credit documents. They don’t want their Social Security number to get lifted from whoever gets their eyes on it.

CPNs are also being used as a way to fake a credit repair according to the FTC and also the Office of the Inspector General. “The whole industry is set up to fool consumers to think these CPNs are legal,” said Frank McKenna to Automotive News. He’s the chief fraud specialist for PointPredictive. “All they are are stolen Social Security numbers.”

In this auto loan scam, some CPN numbers belong to children

Some CPN numbers are dormant Social Security numbers that belong to children. If you use one of these numbers you could unwittingly be charged with identity theft, which leads straight to prison. 

The government doesn’t recognize CPNs. But since the federal government doesn’t require a Social Security number for credit applications some mistakenly believe they are legal. 

CPN sellers scam clients by suggesting how to fraudulently create identities

There are CPN sellers who provide the instructions for creating separate identities. Those with poor credit or no Social Security number are the main targets. The sellers instruct purchasers to get a new mail-drop location and list a temporary phone number. This helps to bolster the fake profile. 

Credit bureaus use several metrics to determine if they are dealing with the right person. So addresses and phone numbers are used this is why CPN sellers encourage clients to change those numbers so that the info can’t be matched.

In December 2019 numerous auto lenders reported altered Social Security numbers used for vehicle applications according to PointPredictive. The majority of these incidents were from Southern California.

Another swindle being seen is substituting the last four digits of a Social Security number with the birthday of the fake identity. “They find a prefix, change the last four digits slightly and sell it to another person, McKenna says. “It might be easy to keep track of, to sell. They create this structure to systematize it.”

In 2019 over $7 billion in vehicle loans involved scams

In 2019 it is estimated that $7 billion in vehicle loans used fraudulent information. This included misrepresented income, employment, identity, and collateral. That is an increase of 5% from 2018. 

There is no such thing as a “new credit identity.” If someone or a company says it can do that for you it’s a scam. If a company wants you to apply for an Employer Identification Number instead of a Social Security number they are not legitimate. EINs are not a substitute for a Social Security number.