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Mike Cook: Identifying synthetic is important, but having the ability to go down to that deeper level and tease out, is that synthetic a consumer who’s changing their identity, or is that synthetic a complete fake identity? And the reason you want to know that is they behave differently. They have different motivations and you have to be able to step them up to the right technology to truly keep them out of the front door.

So let me take manipulated first, and we use the Boston Fed definition for synthetic fraud and they actually define synthetic, fabricated, manipulated and then they define beneath that, some subtypes. And that gets right to the question of what are the motivations? So manipulated, I have gone bad before, gee, that seemed great. I got to steal a lot of good things. I have money, right? And if I can repair my credit, I can then steal more from you and go bad again. That’s called credit repair. So for manipulated, you’ve got those folks that are basically trying to say, ‘hey, I’m just gonna continue to try and defeat the system.’

Okay. That’s one motivation under manipulated. The other is credit for a living. And that’s basically, ‘hey, I’m a consumer. I went through a hard economic time. Covid killed me. I lost my job and I need a car. I can’t get to work unless I have a car, right?’ Or I’m an undocumented worker and I need a credit card.

So it’s basically they are gonna pay you back and this creates the problem for lenders. It’s not a compliant identity because it doesn’t tie to a real identity, but it doesn’t bring a loss to that lender. So those are the two motivations underneath manipulated, fabricated is very, very different.

Their motivations, fabricated identities are worse. One reason to fabricate identity to establish a bank account and let me drive payment schemes through that bank account, and that’s. The Fed’s definition of payment schemes that falls under fabricated identities. The other motivation is I think much, much worse and probably the most sinister of all: synthetic identity fraud.

And those are called other, which is an interesting definition. But other synthetic fabricated identities are those people that are doing human trafficking, drug trafficking, terrorism, they’re financing terrible, terrible things and they tend to fly under the radar because the bank’s not taking a loss.

Transactions are happening, they’re flowing through the system, but it’s some very, very nefarious activities. So motivations are very different between fabricated and manipulated. Manipulated, at least some of those people are gonna pay you back. Fabricated are always bad and sometimes absolutely terrible.