FIS Modern Banking Platform
Advance your bank with a modern core platform.
Ron Whyte | Senior Vice President, Group Executive, FIS
March 09, 2020
Synthetic identities are called Frankenstein IDs, because they are cobbled together from identity elements from different sources – not just one poor victim of identity theft. While their purpose is simple – to enable fraudsters to open new bank accounts and lines of credit to steal money – synthetic identity scams are more complex than typical identity fraud.
McKinsey & Company estimates that synthetic identity fraud is the fastest-growing type of financial crime in the United States. Losses from synthetic identity are difficult to distinguish from losses from bad debt. However, in an Aite survey, financial institutions reported losses from $10,000 - $15,000 per verified incident. Gartner projects that first-party fraud and synthetic identity fraud will account for 40 percent of write-offs by 2021, up from 25 percent in 2018.
It’s time for financial institutions to ramp up their methods for detecting potential synthetic identity fraudsters when they first apply for an account or credit.
In a recently-released paper, the Federal Reserve identifies three main reasons for the boom in synthetic identity theft:
Aite cites two more factors contributing to risk – the loosening of credit standards and EMV migration. When the door closed on fraudsters at point-of-purchase, they didn’t disappear. They just moved to more vulnerable spaces.
Synthetic identity fraudsters aren’t run-of-the-mill crooks. With the goal of getting the most payback per scam, they take their time to perpetrate crimes. They spend months cultivating fake identities and maximizing their credit line before “busting out.”
Combatting savvy fraudsters requires rigorous interrogation of additional data elements associated with an individual’s profile that go beyond traditional ID verification from the get go. Innovative solutions bring fraud and risk strategies to the next level. For example, the FIS Synthetic Index service provides a real-time alert when elements associated with an identity meet risk conditions that indicate components of an identity are synthetic, stolen or manipulated. As part of a dynamic and comprehensive verification screening, this tool equips financial institutions to reduce fraud losses and avoid high collection expenses associated with chasing bad debt.
We are here to help you and your business. Contact us using the button below.Learn more