How can financial institutions and other payments professionals more effectively fight fake identities used for fraud involving payments?
The July/August issue of Fraud Magazine, published by the Association of Certified Fraud Examiners (ACFE), features an article (Off-site) on synthetic identity fraud co-authored by Mike Timoney and Staci Shatsoff of Federal Reserve Financial Services. This is the second Fraud Magazine article (Off-site) to highlight the Fed’s continued collaboration with industry professionals on fraud awareness and action.
Key takeaways from the article:
- The COVID-19 pandemic created new fraud opportunities as individuals and businesses increasingly adopted remote payments. In 2020 alone, losses related to synthetic identity fraud were estimated to be $20 billion for U.S. banks and financial institutions (Off-site).
- Synthetic identity fraud (Off-site) is the use of a combination of personally identifiable information (PII) to fabricate a person or entity in order to commit a dishonest act for personal or financial gain. This type of fraud is different from traditional identity theft, where a fraudster steals an actual person’s identity. A synthetic identity may include some pieces of PII from a real person – such as a name, date of birth or Social Security number – with fabricated information – such as a mailing address, phone number or email address.
- Taking the next step in a years-long commitment and responding to widespread industry feedback, the Fed released – and continues to update – a Synthetic Identity Fraud Mitigation Toolkit (Off-site). This online repository was a collaborative effort among numerous industry participants and features important themes, insights and resources that can benefit financial institutions and businesses alike.
- While the Fed’s toolkit is designed to educate the industry about synthetic identities, how they’re used in crimes and how to prevent and deter fraud, it also contains resources that financial institutions can make available to their customers to help individuals protect themselves (Off-site) from falling victim to synthetic identity fraud.
- It is difficult for a single organization to effectively fight synthetic identity fraud alone. Improved awareness, understanding, data strategy, reporting and information sharing (Off-site), alongside advancements in technology (Off-site) – such as machine learning and artificial intelligence – are all helping organizations fight and stay ahead of fraudsters.
To learn more, visit Fraud Magazine (Off-site). Become a member of the FedPayments Improvement Community (Off-site) for the latest news and perspectives on the Fed’s ongoing work to advance payments security.
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