In Part One of this series, we examined the surprising ways the COVID-19 pandemic affected synthetic identity fraud. (For more detailed information, download the report from the Aite Group.) In Part Two, we offer recommendations for businesses looking to mitigate synthetic identity fraud — where criminals combine real and fake information to create a new identity to open fraudulent accounts and make fraudulent purchases.
Whatever happens in 2021, one thing’s for certain: Detecting and eliminating synthetic identities is likely to become more challenging as digital fraud continues to become more sophisticated. By following these recommendations, however, you’ll be well- positioned to protect your business and consumers.
- Use analytics to drive synthetic fraud risk detection. Models and predictive attributes have proven highly effective in reducing synthetic fraud risk for lenders, mobile carriers, rental screening firms and others. Predictive models like TruValidate Synthetic Fraud Model proactively flag suspected synthetic identities while limiting the impact to good consumers — ultimately providing a friction-right experience.
- Eligible financial services organizations should take advantage of the SSA’s electronic Consent Based Social Security Number Verification (eCBSV) but shouldn’t stop there. Electronic consent from the consumer is an advancement in Social Security number verification, but more accurate results can be achieved by first applying fraud prevention models and analytics. This lower-friction means of validating SSNs is an ideal way of adding step-up verification and deterring synthetic identities from entering your portfolio.
- Implement device intelligence that better identifies and protects against synthetic fraud rings. Device recognition technology like TruValidate Device Risk adds an independent layer of digital identity separate from personal data, making it a powerful tool for discovering and disrupting active fraud and synthetic identity fraud rings. Built upon incredibly robust datasets, TruValidate’s integrated suite of identity proofing solutions unifies personal and digital data into a more precise and accurate data identity.
- Monitor your current customer base and understand the synthetic risk profile. While incidence rates on new accounts for consumer credit are down overall, many non-genuine identities entered the financial system in prior years and have remained there partly due to a lack of derogatory performance. Some may have malicious intent and are disguised as good customers, while others may have used fabricated identities to avoid showing you a risky past. Monitoring solutions like TruValidate Fraud Prevention Exchange pull from a global network of confirmed fraud to reveal indications of risk, and will alert you when you’ve been exposed.
There’s an undeniable threat of increased synthetic identity fraud risk across all industries. To better understand its harmful impacts on US-based financial services firms, TransUnion sponsored Aite Group to conduct an executive survey in Sept. 2020. The findings revealed 72% of financial services firms surveyed believe synthetic identity fraud is a much more pressing issue than identity theft, and the majority plan to make substantive changes in the next two years.
That said, the progress made by financial institutions in card, auto and personal lending suggests with a purposeful strategy and intelligent tooling, synthetic fraud risk can be mitigated by developing a best-in-class experience.
Read the Aite Group report to find out how the financial services industry is responding to rising synthetic identity fraud, and visit TransUnion for information on TruValidate solutions for identity proofing and fraud analytics.