The use of synthetic identity fraud as a secret weapon is increasing, and businesses must take precautions to protect themselves. This type of fraud occurs when criminals use stolen or fabricated information to create a new identity. Synthetic identities can be used to commit crimes such as credit card fraud, money laundering, and tax evasion. This blog post will discuss how synthetic identity fraud works and how businesses can protect themselves from it.
E-tailers in the U.S. will target 30% of all fraud losses in 2021. There has been an uptick in “synthetic identity fraud,” when bad people mix stolen data (phone numbers, emails) with fake data to make a fake identity.
After the pandemic, fraudsters have taken advantage of people’s fear and increased online activity to get their hands on their login information with little effort. Given this trend, experts predict that synthetic identity fraud will rise again in 2022, especially in the financial services field and on platforms that allow users to sign up quickly.
With social security number randomization making “Frankenstein identities” more common, it’s essential to stop this type of identity fraud before it turns into a costly and potentially long-term mess.
Not Your Average ID Fraud
Synthetic ID fraud is hard to stop because it’s made up of many different parts. A synthetic identity makes up fake and accurate information from various sources instead of just focusing on one person. This makes it much more difficult to find. When no one was defrauded, accounts made with a fake I.D. can stay open indefinitely like money-sucking leeches, only to disappear when the on-file credit card is used up.
Again, there isn’t a real person who can be traced back to the account, making it hard to find synthetic identity fraud and figure out how much money has been lost (assuming fraud is circled as the culprit). Synthetic identity fraud is a problem because businesses have different ideas about it. This leaves credit lenders and other service providers to shoulder the financial burden.
If they need to, synthetic fraudsters can get around defenses with more than just a fake SSN and a stolen email address, though. Forget “Frankenstein identities.” The best fakers use facial features from multiple people and A.I. to make “Frankenstein faces” that look real. It’s yet another wire-crossing move that throws traditional fraud detection systems off the scent.
Synthetic Antiseptics Are a Secret Weapon
It detects fraudsters using static data like physical addresses and device fingerprinting. This won’t work for people who make up fake identities.
Only by combining static data with real-time and historical real-time user activity data can you find out about stealthy synthetic fraudsters. This is the only way to do it. It’s hard for fraudsters to hide or build an authentic digital “legend” if they add this extra layer of real-time intelligence, including things like behavioral biometrics and time of day, location, and more. This means that more than enough information is available to help companies spot a fake identity.
This is precisely what Deduce does to add a little extra oomph. Synthetic identity fraud can cost businesses money, but our real-time Identity Network protects them from these nightmare consequences. We put 400 million anonymized U.S. profiles and 1.2 billion daily user activities from more than 150,000 websites and apps into the network to keep businesses safe from financial losses and other nightmare consequences. For example, a solution that only looks at static data will make false positives and turn away good customers. The Deduce approach, on the other hand, can look at situations where a new device or other factor isn’t consistent with identity fraud.
It’s hard for fraudsters to fool the collective intelligence and history of the Deduce Network, so they can’t fool it with a fake of many different things. We have too much information about our transactions, social media activity, and so on for most fraudsters to get around.