Synthetic Identity Fraud Trends in the Automotive Industry: What the Latest Auto Insights Report Reveals
Highlights:
- Synthetic ID 3.0 risk scores (above 890) correlate with a massive increase in late-stage delinquency (90+ DPD) for SuperPrime auto accounts, rising from 0.3% (low-risk) to 7.9% (high-risk).
- High synthetic risk delinquent trades in the SuperPrime segment carry significantly larger loss exposure, with an average remaining loan balance that is $4,400 higher than low synthetic risk delinquent trades.
In our latest Auto Insights Report, we take a closer look at Synthetic ID 3.0 and what it means for lenders.
As fraud continues to evolve, it’s more important than ever to understand how synthetic identity risk can affect portfolio performance. Our findings show that high synthetic risk is strongly linked to higher delinquency rates and larger balances at risk.
What Is Synthetic ID 3.0?
Synthetic ID 3.0 is a scoring model that predicts the likelihood that an applicant has a synthetic identity. A synthetic identity is created when real and fake information are combined to form a new, false identity. These identities can be used to open accounts and build credit before eventually defaulting.
The Synthetic ID 3.0 score ranges from 1 to 990, and the higher the score, the greater the risk that the identity is synthetic. In our report, we define high synthetic ID risk as a score above 890. Accounts that fall into this category show very different performance patterns compared to lower-risk accounts.
High Synthetic Risk and Delinquency
One of the most important findings in this report is the link between high synthetic risk and delinquency. Accounts with a Synthetic ID 3.0 score above 890 have a significantly higher bad rate than those in the low synthetic ID risk segment.
This trend becomes even more striking when we look at SuperPrime borrowers. SuperPrime typically refers to borrowers with credit scores above 720. These consumers are usually considered very low risk. However, when a SuperPrime borrower also has high synthetic risk trades, the performance tells a different story.
Among SuperPrime accounts with high synthetic risk, the late-stage delinquency rate (90+ days past due) is 7.9%. In contrast, SuperPrime accounts with lower synthetic risk have a 90+ day delinquency rate of just 0.3%. That gap is substantial. It shows that traditional credit scores alone may not fully capture risk when synthetic identity is involved.
Why This Matters for Lenders
For lenders, these findings highlight a key issue. A borrower may look strong based on a traditional credit score, but still carry elevated risk due to synthetic identity indicators. If this risk is not identified and mitigated early, it can lead to unexpected losses.
The fact that SuperPrime accounts can show such a sharp increase in delinquency when synthetic risk is high should be a wake-up call. It suggests that layering synthetic identity risk models on top of traditional credit scores can provide a clearer and more complete risk picture.
Higher Balances at Risk
It’s not just the probability of delinquency that increases with high synthetic risk. The size of the potential loss also grows.
For those trades in delinquent status (90+ days) and SuperPrime score band, the average auto loan remaining balance is $4,400 higher than for low synthetic risk trades. This means that when these accounts go bad, they tend to carry significantly larger balances.
This combination of higher delinquency rates and larger balances creates a double impact. Lenders are not only more likely to see these accounts default, but they also stand to lose more when they do.
A Broader Risk Perspective
The results from our Synthetic ID 3.0 analysis reinforce an important lesson. Credit risk is no longer just about traditional credit metrics. Fraud risk and identity risk are increasingly connected to portfolio performance.
By identifying applicants with a high likelihood of synthetic identity, lenders can make more informed decisions. This may include further identity verification at account opening or applying enhanced monitoring for existing accounts. The goal is not to reduce approvals across the board but to better match risk with strategy.
Looking Ahead
As synthetic identity fraud continues to grow, tools like Synthetic ID 3.0 will play a critical role in risk management. A score above 890 signals a meaningful increase in both synthetic identity risk and exposure, even among borrowers who appear strong on paper.
Our latest Auto Insights Report makes one thing clear: Synthetic identity risk can significantly change the performance outlook of an account. By incorporating this insight into underwriting and portfolio management, lenders can better protect themselves from potential synthetic identities and improve long-term results.
Understanding and acting on synthetic identity risk is no longer optional. It is an essential step toward building stronger, more resilient auto lending portfolios.
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