The US Federal Reserve says a new crime trend has seen fraudsters combine a fake name and other fictional personal data such as a date of birth with a true Social Security number.
Called Synthetic Identity Fraud, the Fed wrote in a report published this week that it is increasingly impacting on the U.S. Payment System, which it calls the “fastest growing type of financial crime in the United States.”
According to the report, synthetic ID fraud cost U.S. lenders $6 billion in 2016. Synthetic ID fraud is the fastest-growing type of financial crime in the United States, accounting for 10-15% of charge-offs in a typical unsecured lending portfolio, according to McKinsey. Perhaps the most staggering finding is that 85-95% of credit applicants identified as potential synthetic identities are not flagged by traditional fraud models.