What is synthetic identity fraud?

Q: What is synthetic identity fraud?

Synthetic Identity Fraud is a type of financial fraud in which criminals create a fictitious identity by combining legitimate personal information, such as a valid Social Security number, with fabricated details. These synthetic identities are used to open accounts, obtain credit, and commit fraud while avoiding detection by traditional identity verification methods.

Synthetic Identity Fraud

Risk

Synthetic Identity Fraud is a type of financial fraud in which criminals create a fictitious identity by combining legitimate personal information, such as a valid Social Security number, with fabricated details. These synthetic identities are used to open accounts, obtain credit, and commit fraud while avoiding detection by traditional identity verification methods.

Synthetic Identity Fraud exploits gaps in identity verification by blending real and false information to establish seemingly legitimate borrower profiles.

Why it matters for financial institutions

Synthetic Identity Fraud can lead to significant credit losses, charge-offs, and regulatory scrutiny for financial institutions. Advanced fraud detection tools, identity verification, analytics, and ongoing monitoring help identify suspicious applications early, reduce losses, and protect both institutions and legitimate consumers.