Socure, the leading provider of digital identity verification and fraud solutions, today announced its commitment to rooting out 100,000 synthetic identities from the US financial system. This announcement comes amid an explosive uptick in synthetic identity attacks on financial deposit accounts central to enabling money mules, money laundering and other nefarious money movement.
Synthetic identity fraud is the fastest-growing financial crime according to the US Department of Justice. For example, the Pandemic Response Accountability Committee (PRAC) recently determined that $5.4 billion in COVID-19 relief loans were traced back to synthetic identities using fake social security numbers that were disbursed to applicants between April 2020 and October 2022.
If left unchecked, synthetic identity fraud could cost close to $5 billion in 2024, according to Socure’s The State of Synthetic Fraud report. The same report found that synthetic identities are being used as money mules to fuel fraudulent money movement. In addition, peer to peer payment (P2P) scams have doubled from 2020 to 2021, and are on course to continue growing, according to the report. Government regulators, like the Consumer Financial Protection Bureau (CFPB), are taking notice, signaling that they are looking to mandate that banks shoulder financial losses stemming from these scams. Currently, consumers are most at risk for financial losses from payment scams using synthetic identities; regulations or self-regulation by the industry could shift a little more than $2B in potential losses away from consumers and to the banks themselves.
“Synthetic fraud behaviors have changed drastically following the pandemic, and are now attacking deposit accounts at higher rates than any other time in history, where they are being used as money mules to fuel fraudulent money movement. Bad actors have been given free rein for too long, and it is high time to eliminate these mules,” said Mike Cook, vice president of fraud solutions at Socure. “Our goal is to completely eliminate synthetic identities from the US financial system by 2026. This is an eminently achievable goal by partnering with the industry and government agencies. Today’s target of 100,000 synthetic identity takedowns is just the beginning.”
Socure’s Sigma Synthetic Fraud is a purpose-built synthetic identity fraud detection solution that blocks harmful synthetic identities from entering an ecosystem at account creation. The model employs advanced machine learning (ML) techniques cyclically trained with expert human-in-the-loop analysis to mitigate rapidly evolving and complex synthetic patterns. It results in the ability to capture more synthetic fraud while creating a lower-friction consumer experience–a balance that is particularly hard to strike as the nation’s banking system is under attack.
While it is essential to block the onboarding of synthetic identities in real time, Socure also partners with organizations to identify and remove synthetic identities that have previously been accepted and exist within their portfolio by conducting ‘scrubs’ using our synthetic fraud models.
Identifying and eliminating money mule accounts from the US financial system will help reduce the amount of scams perpetrated by bad actors against consumers—since these mules will have fewer places to receive and send fraudulently earned dollars. This will also help stop money laundering, human and drug trafficking, and other nefarious payment schemes that are falling under the radar today.
Socure’s research found that anywhere from 1-3 of every 100 of the 169M bank accounts opened in the US belongs to a synthetic identity. Socure’s experts can help any organization identify and eliminate the synthetic and other fraudulent identities already lurking in existing portfolios. As the company works to eradicate synthetic identities from the financial system by 2026, this effort is just the beginning. To learn more click here.
Socure will produce bi-annual updates on the number of synthetic fraud accounts identified and eliminated from the financial ecosystem throughout the year.