Identity & Fraud

Synthetic ID Fraud Is Not a Fictional Threat

Synthetic ID Fraud Is Not a Fictional Threat

May 04, 2016 | Sally Ewalt

The growth of synthetic identity fraud shows few signs of slowing. Data breaches, social media mining, phishing and other schemes have given fraudsters easy access to the consumer data used to build synthetic, or false, IDs. These false identities are then used to acquire products and services from banks, telecommunications providers, utility service providers and other organizations.

There are good solutions out there to help organizations to fight back against synthetic ID fraud. These solutions detect and monitor behavioral patterns early in the process to prevent or mitigate extensive losses. Effective fraud-detection solutions must be robust enough to handle both increasing volumes of pertinent data and savvy criminals.

One example of how pervasive synthetic ID fraud can be is a scam prosecuted by the FBI in which fraudsters created more than 7,000 fake IDs and stole more than $200 million. And that is hardly the last time this type of scam has been used.

The scheme involved a three-step process in which the defendants would:
  1. Make up a false identity by creating fraudulent identification documents and fraudulent credit profiles.
  2. Pump up the credit of the false identity by providing false information about that identity’s creditworthiness.
  3. Run up large loans using the false identity. The higher the fraudulent credit score, the larger the loans that the defendants could obtain. These loans were never repaid, and the conspirators reaped the profits.

Take a look at this animated infographic to learn more about how these types of scams work and how to prevent against them.