As technology evolves, so do fraudsters who swarm toward the next profitable opportunity. To watch out for synthetic fraud, you have to know where to look and how to fix and bolster defenses.
During the pandemic, people were forced to use digital services more than ever before. As a result, vendors focused on providing a good customer experience and being empathetic to those experiencing financial difficulties. Due to this new environment however, synthetic fraud can hide longer in the system before being discovered. Increased delinquency issues along with up-ended work and living situations mask fraud attacks. Stay focused on preventing fraud by implementing precautionary measures and tools shared below.
Synthetic fraud occurs when bad actors create a “fake” identity (potentially comprised of multiple real identities) to defraud organizations. Unlike traditional 3rd party fraud, there aren’t “victims” to claim a stolen identity.
Because synthetic ID attacks and losses are not easily defined, many financial institutions may not recognize the problem until too late. You can get a false sense of security by simply comparing loss rates to industry benchmarks. Synthetic fraud losses may be hidden because they can appear as credit losses instead of fraud losses.
Answering “yes” may indicate synthetic fraud. So, what do you do?
These frauds typically use common information across the accounts such as phone numbers, addresses, driver’s license information, and other synthetic personally identifiable information.
Identify links between accounts that use similar information but for different customers – you may reveal a web of linked accounts and identities within the portfolios. Common link analysis and consortium data-based solutions are often used to identify other accounts potentially associated with synthetic fraud perpetrators.
Be sure to analyze across products and portfolios since these frauds typically exploit as many accounts as much as possible.
If your research indicates evidence of synthetic fraud, you need to implement countermeasures and enhanced authentication to minimize the opportunity for exploitation.
Sounds like a lot—but it’s doable. Start with these steps:
Implement countermeasures and enhanced authentication to minimize exploitation of synthetic fraud.
Synthetic fraud is not new, but all signs indicate it is increasing and today’s fast digital marketplace makes detection and prevention that much more difficult.
Bridgeforce has extensive experience in combatting synthetic fraud, including assessments, new rule identification, developing policies and procedures and optimizing operations to help organizations be more efficient and effective in fraud prevention. We also partner with ID Analytics to provide best-in-class credit and fraud risk solutions. Contact us for support in executing these steps to reduce synthetic fraud losses.