Why Synthetic ID Fraud Should Be On your Radar
Synthetic ID fraud is difficult to detect because it appears to be an actual consumer applying for an account. Instead, it’s a fake identity. These identities are created using a mix of personal identifiers from different people to form a complete identity. Since synthetic identities are not linked to real people, there is no one to pay the bill, and nowhere to go when it’s time to collect. You’re stuck with an account balance that will ultimately be charged off.
It’s costing businesses hundreds of millions each year
Synthetic identity (ID) fraud is the fastest growing type of identity fraud. It accounts for up to 80 percent of all identity fraud, including “true name” fraud. It was a $700 million problem for businesses in 2016, and it’s rising at a stunning rate of 17 percent annually—bringing the total impact to nearly $1 billion by 2020. If you don’t have a plan to combat synthetic ID fraud, now’s the time to get one.
Get a plan, build a checklist
You can start with research. The more you know about synthetic ID fraud, the better you can defend against it. Your current data provider is a great resource for information, since they’re on the front lines every day. They can help you learn all about this unique type of fraud, including:
- How synthetic ID fraud begins
- The path it takes once inside your business
- It’s impact on your industry
- How others within your industry are fighting it
Like other forms of fraud, particularly online fraud, synthetic ID fraud is fast-moving and constantly evolving with changing consumer behaviors and security strategies. Once you’re up to speed on the latest tactics, it’s important to stay up to date. Consider setting online news alerts about synthetic ID fraud and subscribing to relevant blogs and emails from industry groups and fraud associations. Also, stay connected via networking platforms such as Twitter and LinkedIn.
Next, work with your data provider and relevant functional teams within your organization to:
- Review your current fraud mitigation strategy. If it doesn’t address the latest synthetic ID fraud tactics, revise your strategy accordingly. Take the time to test any new fraud mitigation processes and controls put in place and document all policy changes.
- Establish a benchmark. Compare fraud activity within your organization to other similarly-sized businesses within your industry.
- Continuously monitor all fraud activity and establish a regular review schedule. Analyze all fraud activity on a weekly, monthly or quarterly basis, and compare it against your benchmark to help determine how you should move forward.
With a solid understanding of synthetic ID fraud, build a proactive strategy that’s focused on recognizing and stopping it before it enters your business. For additional insight and guidance, download the Synthetic Identity Fraud Checklist for Service Providers.
Recommended For You
Identity Fraud Accelerates in 2020 The year 2020 was a heyday for online fraudsters. There are a couple of reasons […]
Many auto lenders and dealerships are aware of the general risks associated with fraud. However, synthetic identity fraud is especially […]
Authentication Strategies for Today’s Digital Age Carefully orchestrated authentication and identification strategies are critical in today’s digital era, especially since […]
Synthetic Identity Fraud is a Growing Threat We’ve said it before, and we’ll say it again: Synthetic identity fraud is […]