Understanding and preventing synthetic identity fraud

Phishing scams, data breaches, hacks and physical theft are just a few of the techniques cybercriminals use to steal consumers’ private information. Synthetic identity fraud is one type of fraud tactic that financial institutions need to be on the lookout for. In these cases, the fraudsters create a “synthetic” identity that combines fabricated information with stolen consumer information, such as names, birthdays, Social Security numbers and/or addresses. This synthetic identity is then used to fraudulently open new credit cards, debit cards or loans with the aim of racking up as much money as possible once the funds from these accounts are available to them.

The key to preventing synthetic identity fraud attacks like this one is to adopt strong authentication requirements for any new account, loan, or card opening requests, whether online or in the branch. This is going to be especially important this year, as there will be a lift in fraud attempts resulting from the devastating amount of consumer data that was compromised during last year’s Equifax breach.

Synthetic identity Fraud Prevention checklist:

• Use multiple layers of authentication to validate the identity of a consumer requesting to open an account online or in a branch. Request information aside from what was compromised during the Equifax breach.
• Many of your consumers’ social security numbers may have been exposed during the breach, so don’t rely solely on social security numbers to authenticate a consumer’s identity.

 

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