Socure, the leader in Day Zero digital identity verification, has published a new white paper on the growing issue of synthetic identity fraud, the fastest-growing financial crime in the U.S. According to the Federal Reserve, lenders lost six billion dollars to synthetic fraud in 2016 alone.

Synthetic fraud is a gradual process in which fraudsters compile a false identity to resemble a person, then use the false identity to commit financial crimes. The ultimate goal is to compile data elements or profile attributes—taken from different individuals—to present a “new” face that can get past the first line of defense with an appearance of legitimacy.

The paper, titled “The Identities Are Fake, but the Consequences Are Not,” examines the phenomenon of synthetic identity fraud, the methods fraudsters are employing, and why financial institutions are particularly vulnerable targets. The paper also addresses how advanced analytics and data science are helping institutions grapple with synthetic identity fraud.

“Synthetic identity fraud presents some unique challenges for financial institutions,” says Jeff Scheidel, Head of Training & Development at Socure. “Because a synthetic identity is composed of very real characteristics, even if the name or person is fabricated, it may have been so imbued with sufficient history that it can pass an identity and a Know Your Customer (KYC) check.”

The paper examines the primary methods used to synthesize an identity, which include:

  • Fabrication to create a completely fake identity containing no actual data related to an actual human being.
  • Identity manipulation modifying actual identity attributes of the fake person.
  • Identity compilation, the combination of modified and actual attributes, and the committing of the crime.

The paper underscores how difficult synthetic identity fraud can be to detect and deter, with no single real person to report the fraud. According to the Federal Reserve, between 85 and 95 percent of synthetic applicants are not picked up by standard fraud models.

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Socure is the leading platform for digital identity verification and trust. Its predictive analytics platform applies artificial intelligence and machine learning techniques with trusted online/offline data intelligence from email, phone, address, IP, device, velocity, and the broader internet to verify identities in real time. The company has more than 500 customers across the financial services, gaming, healthcare, telecom, and e-commerce industries, including four of the top five banks, seven of the top 10 card issuers, three of the top MSBs, the top payroll provider, the top credit bureau, the top online gaming operator, the top Buy Now, Pay Later provider, and over 100 of the largest fintechs. Marquee customers include Chime, Varo Money, Public, Stash, and DraftKings. Investors include Accel, Commerce Ventures, Scale Venture Partners, Flint Capital, Capital One Ventures, Citi Ventures, Wells Fargo Strategic Capital, Synchrony, Sorenson, Two Sigma Ventures, and others.

Socure has received numerous industry awards and accolades, including being named to Forbes America’s Best Startup Employers 2021, being awarded Best New Technology Introduced over the Last 12 Months – Data and Data Services at the 2020 American Financial Technology Awards (AFTAs), being ranked number 70 in Deloitte’s Technology Fast 500™, being listed as a Gartner Cool Vendor, being recognized by Forbes as one of the Top 25 Machine Learning Startups to Watch, being named to CB Insights: The FinTech 250, and being awarded Finovate’s Award for Best Use of AI/ML, to name a few.


Janine Savarese
Savarese Communications
(908) 461-5767