Continuing to support the payments industry and fraud experts in their fight against fraud, the Federal Reserve has now released additional resources in its Synthetic Identity Fraud Mitigation Toolkit (Off-site).
Synthetic identity fraud, where fraudsters create an identity using real and/or fictitious information, resulted in an estimated $20 billion in losses (Off-site) for U.S. banks and financial institutions in 2020 alone. Yet feedback from the Federal Reserve’s ongoing engagement with fraud experts reinforces the need for more awareness and education on this topic.
In this latest release, toolkit resources present various identity validation methods (Off-site) that can include document verification; alternative data, such as public and internet-based information; the Social Security Administration’s electronic Consent Based Social Security Number Verification (eCBSV) Service (Off-site); digital information, such as user activity; and technology solutions.
Other newly added resources outline how to help identify synthetics (Off-site) at different stages in the account relationship. This includes at the account opening, before fraudsters can masquerade as “real” customers to create losses; during routine automated and/or manual monitoring of accounts within a portfolio; and after a loss, when miscategorization of a synthetic as a real customer can open the door for the identity to rebuild a positive credit history and vanish yet again without repaying.
Explore the full online toolkit (Off-site) for insights and downloadable resources on a variety of topics, including:
- Synthetic Identity Fraud: The Basics (Off-site) – explains what synthetic identity fraud is, why you should care and why fraudsters commit this type of fraud.
- How Synthetic Identities are Used (Off-site) – describes what is hiding in your portfolio and how fraudsters use synthetics to commit fraud and increase their payouts.
- When Synthetics Become a Reality (Off-site) – outlines examples of common synthetic use cases.
- Detecting a Synthetic Identity (Off-site) – provides tools to help colleagues and consumers identify and prevent synthetic identity fraud.
- NEW: How to Validate Identities (Offsite) – discusses how to differentiate real customers versus synthetics using a suite of identity validation tools and alternative data.
- NEW: When to Identify Synthetics (Off-site) – focuses on identifying synthetics at different stages of the relationship, including at the account opening, when already existing within a portfolio and during post-loss analyses.
Stay tuned for more information and engagement opportunities from the Federal Reserve as we continue to collaborate with the payments industry to address this type of fraud.
The synthetic identity fraud mitigation toolkit was developed by the Federal Reserve to help educate the industry about synthetic identity fraud and outline potential ways to help detect and mitigate this fraud type. Insights for this toolkit were provided through interviews with industry experts, publicly available research, and team member expertise. This toolkit is not intended to result in any regulatory or reporting requirements, imply any liabilities for fraud loss, or confer any legal status, legal definitions, or legal rights or responsibilities. While use of this toolkit throughout the industry is encouraged, utilization of the toolkit is voluntary at the discretion of each individual entity. Absent written consent, this toolkit may not be used in a manner that suggests the Federal Reserve endorses a third-party product or service.