Synthetic identity fraud is a type of identity theft where criminals combine real and fake information to create a new, fictitious identity. This synthetic identity is then used to commit fraudulent activities, often exploiting financial systems and services.
Synthetic identity fraud is challenging to defend against because it involves manipulating or entirely fabricating identities and gradually establishing credit. The combination of real and false data, as well as the gradual development of credit make it difficult for traditional verification systems to detect and prevent fraudulent activities.
Socure’s solution, Sigma Synthetic Fraud, proactively detects synthetic identity fraud before it causes financial losses or reputational harm. Sigma Synthetic Fraud combines 400+ third-party data sources and uses the industry’s most predictive machine learning algorithms to uncover complex patterns and connect synthetic-specific behavioral elements. This empowers your organization to capture fraud at the door — making way for more good customers.
How to Help Protect Against Synthetic Identity Fraud
Several steps can be taken to protect against synthetic identity fraud.
- Strengthening identity verification processes: Enhance the accuracy and depth of digital identity verification by incorporating biometric data, document verification, and robust authentication protocols to ensure the legitimacy of individuals entering the system.
- Regularly monitoring and updating customer information: Establish a proactive system for continuous monitoring and updating of customer data, promptly identifying any irregularities or inconsistencies that may signal potential synthetic identity fraud.
- Implementing multi-factor authentication: Enforce an additional layer of security by implementing multi-factor authentication methods, such as one-time passwords, biometric verification, or device authentication, to fortify access controls and hinder unauthorized access attempts.
- Utilizing advanced fraud detection technologies: Deploy cutting-edge technologies, including machine learning algorithms and artificial intelligence, to analyze patterns, detect anomalies, and identify potential instances of synthetic identity fraud in real time, augmenting the ability to stay ahead of evolving fraudulent tactics.
- Educating employees and customers about synthetic identity fraud: Foster awareness and understanding among employees and customers regarding the tactics and risks associated with synthetic identity fraud, empowering them to recognize suspicious activities and report them promptly.
- Collaborating with industry partners to share information: Establish collaborative partnerships within the industry to facilitate the sharing of information and insights on emerging threats and trends related to synthetic identity fraud, enabling a collective and proactive response to potential risks.
Socure’s Sigma Synthetic Fraud solution reduces false positives by 25% and increases synthetic fraud capture to 71% in the riskiest 3% of users. With the industry’s largest volume of consortium feedback, human-in-the-loop label cleansing, and generative AI techniques for email tumbling risk detection, Socure expertly stops synthetic fraud while improving the user experience for your trusted customers.
Synthetic Identity Fraud vs. Traditional Identity Fraud
Synthetic identity fraud involves the creation of a manipulated or fabricated identity, while traditional identity fraud exploits a complete and authentic identity of an individual.
Both traditional identity theft and synthetic identity fraud can result in significant financial losses for individuals and financial institutions. However, there are key differences between synthetic and traditional identity fraud that require unique approaches to detection and prevention.
Differences Between Synthetic Identity Fraud and Traditional Identity Fraud
|Synthetic Identity Fraud
|Traditional Identity Fraud
|Composition of Identity
|Involves the creation of a fictitious identity by combining real and fake information, making it a hybrid identity that is harder to trace.
|Involves stealing and exploiting the complete and authentic identity of an individual, including personal information such as Social Security numbers, addresses, and financial details.
|Often more challenging to detect due to the gradual and subtle nature of its activities, as well as the synthetic identity’s gradual development over time.
|Can be detected relatively quickly when victims notice unauthorized transactions or activities on their accounts.
|Victims may remain unaware for an extended period as fraudsters build the synthetic identity’s credibility, delaying the detection of fraudulent activities.
|Victims are typically aware of the theft when they experience immediate financial losses or unauthorized account access.
|Nature of Crimes:
|Involves a more strategic, long-term approach, often targeting financial institutions and exploiting the synthetic identity’s credibility to access higher lines of credit.
|Involves direct, immediate harm to the legitimate identity holder, focusing on exploiting existing accounts or creating new ones using stolen information.