When it comes to fraud in the payments industry, there has been both good news and bad news.
With the widespread adoption of EMV chip cards, there has been a drastic reduction of card-present fraud cases. But as the saying goes, when a door closes, a window opens, and when it comes to fraud, fraudsters are increasingly embracing another method that’s harder to identify and combat: synthetic identity fraud.
The rise in synthetic identity fraud, combined with the dangers it poses, has drawn the notice of major players in the payments industry. In July, the Federal Reserve published a white paper detailing the causes of synthetic identity fraud. Others in the payments space, from analysts at Mercator Advisory Group to thought leaders at PSCU, have also published content chronicling the rise of synthetic identity fraud.
What is synthetic identity fraud and why are leaders in the payments industry raising alarm about it?
Synthetic identity fraud is best understood when compared to traditional identity fraud.