Synthetic identity fraud occurs when a criminal uses a synthetic identity (link) to open accounts, obtain credit, or access services. This fast-growing threat is difficult to detect, as they often pass initial verification checks and can build months or years of legitimate credit history before a fraudster maxes out their credit lines and vanishes. With no "real" victim to report the fraud early on, the fraud often goes undetected and can result in significant synthetic identity fraud losses for lenders.
Use case/ examples for synthetic identity fraud
Lending fraud prevention: Detecting synthetic identities during loan and credit application processes through the use of layered verification that combines document authentication, biometric matching, analysis of application patterns for inconsistencies, and database cross-checks, and flagging applications with characteristics common to synthetic fraud.
Portfolio monitoring: Monitoring existing accounts for behavioral patterns that are commonly associated with synthetic identity bust-out schemes, such as a rapid increase in credit utilization, sudden changes in payment behavior patterns, or purchasing activity inconsistent with the customer profile.
