Fake Identities, Real Crimes: Preventing Synthetic Identity Fraud
Synthetic identity fraud is one of the fastest-growing financial crimes in the United States, accounting for $6 billion in losses for lenders annually. Unlike traditional identity theft, synthetic ID fraud involves the use of a real social security number in conjunction with a fake identity. The combination of real and fake information makes synthetic identity fraud extremely difficult to detect and costs between $10,000 and $15,000 per incident.
Preventing synthetic identity fraud is becoming a critical focus as experts anticipate $1.3 billion in losses in 2020. Let’s explore some ways to keep identities safe from thieves.
Keep your personal information safe
Fraudsters rely heavily on stolen social security numbers to create fake identities. Their biggest targets are children – who’ve yet to establish credit histories and whose credit isn’t monitored. In 2017, more than one million children were victims of identity fraud. The elderly and homeless are also targets due to limited or no credit activity. Identity thieves will even steal social security numbers from the deceased to increase their chances of going undetected.
To minimize risks, ensure that your social security number, both physical and digital, is safe from thieves. Shred old documents that contain personal information. Use safes and lockboxes to store and protect physical records. Also, consider freezing your child’s credit to prevent fraudulent activity.
Monitor your credit activity
In 2019, more than 4.1 billion records were exposed in data breaches. As data breaches and identity theft numbers increase, monitoring your credit activity is a critical part of protecting your identity. Regularly check your credit report to identify any suspicious activity. If you suspect any inconsistencies or unfamiliar activity, immediately contact the credit agency.
Use identity protection solutions from companies like Credit Karma, TransUnion, and Equifax to monitor your credit activity. These platforms will identify new changes in credit scores and activity, alert you to suspicious activity, and notify you if your information was potentially exposed in a data breach.
Financial institutions must also do their part
While consumers need to take the necessary measures to protect themselves, financial institutions must also be proactive when it comes to preventing synthetic identity fraud.
Banks and lenders should utilize tools to validate the identity of new customers. Document verification can stop identity thieves in their tracks. By implementing an address verification tool, banks can mitigate synthetic fraud.
Machine learning and artificial intelligence are also great tools to combat synthetic identity theft, as they improve the customer authentication process. By enabling AI and ML on the backend, banks can analyze and understand customer behavior to identify fraud risks and help in the customer’s application process.
As synthetic identity fraud continues to rise, the responsibility falls on companies, consumers, and even the government to do what we can to mitigate risks. The Social Security Administration is currently working on the Consent Based Social Security Number Verification (eCBSV) system. With an expected launch date of June 2020, this platform will allow financial institutions to verify the name, date of birth, and social security number of an applicant.
READ MORE >> 5 Digital Tools to Help Fight Identity Fraud
Until then, consumers and lenders must do their due diligence to protect themselves. Being proactive and using multiple layers of protection will help reduce the risk of synthetic identity fraud.
What steps are you taking to protect your identity? Chime in on Twitter.
You might also be interested in:
- The Stepping Stone to Self-Sovereign Identity
- Who’s Who? Identity Verification in a Digital World
- 5 Digital Tools to Help Fight Identity Fraud
If you like what you’re reading, why not subscribe?
About Ma-Keba Frye
Ma-Keba Frye is a Content Marketing Associate at Urjanet, assisting with content development and execution. When she's not writing, she enjoys reading, listening to music, and volunteering.