Synthetic Identity Fraud Is The Fastest Growing Financial Crime -- What Can Banks Do To Fight It?
Synthetic identity fraud is a relatively recent phenomenon that is on the rise. McKinsey claims synthetic ID fraud is the fastest-growing type of financial crime in the U.S. LexisNexis Risk Solutions (via Yahoo Finance) found that "61% of fraud losses for [large] banks stem from identity fraud [and] 20% of the identity fraud incurred by these larger banks is synthetic identity fraud."
Synthetic fraud differs from traditional identity fraud in that instead of assuming the identity of a real person using their credit, it creates a new identity using a real social security number with a fictitious name, driver’s license and address. How is this possible?
Traditional identity fraud is usually detected and reported relatively quickly because there is a real victim who is being affected. To create a synthetic identity, a scammer simply needs an unused social security number, often from a child. With this fresh social security number, they can establish a new identity with the credit bureaus.