Synthetic identity fraud, Part One: These numbers will surprise you
Like so much else in 2020, our expectations for synthetic identity fraud turned out differently. What actually occurred, and where do we go from here?
Fraud prevention professionals were blindsided by the COVID-19 pandemic. Nothing could have prepared them for governments and businesses suddenly needing to deliver products and services through digital channels at scale. Of immediate concern was the risk of accelerated identity and financial crimes often seen during localized natural disasters.
Fraud prevention professionals feared an exacerbated rise in fraud due to global financial distress and disruption to normal business practices. In particular, these professionals were alarmed by an increase in synthetic identity fraud, in which criminals combine real and fake information to create a new identity to open fraudulent accounts and make fraudulent purchases. With fewer opportunities to use traditional identity verification methods, the fear was skilled digital scammers and social engineers could find vulnerabilities in faceless channels, and ultimately gain access to cards, loans, goods and services.
However, as we looked back at the incidence rates of synthetic identities in consumer credit, we saw a different story, detailed below. Part Two of this series will offer practical recommendations for mitigating synthetic identity fraud in 2021.
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