Synthetic Identity Fraud

Overview

Synthetic identities fuel application fraud

Data breaches have given fraudsters access to massive quantities of personal data, which they have mixed with fictitious data to create fake identities, enabling fraud at mass scale. Unlike identity theft, where the identity of an actual person is used, synthetic identity fraud is not impersonating an individual, leaving only your organization as the victim and making it much harder to detect.

Frauds enabled by synthetic identities

Fraudsters use identities made from a combination of real and fabricated data to create synthetic identities that they use to commit fraudulent activity.

Synthetic identities are used to open accounts. Because the data elements used to build fake identities are reused many times, it results in mass attacks with attempts to open large numbers of accounts.

Fraudsters use accounts they opened using synthetic identities without raising suspicion, which allows them time to build up credit lines. They bust out by accessing the funds, and they cannot be traced for repayment.

Criminals commit fraud at massive scale, opening many accounts at an institution they are targeting using synthetic identities. Because this crime is connected, data elements will be reused across multiple applications.

Stopping fraudulent applications before completion of onboarding prevents losses from fraud ever happening. Application fraud detection needs to work both pre- and post-book.

Fraud not uncovered before customers are onboarded. Organizations should still endeavor to detect application fraud post-book but before “bust out” happens.

Fraudsters operate accounts in a non-suspicious manner to build up credit lines but haven’t yet bust out.