Communications and Digital Media

Synthetic ID Fraud Checklist

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Synthetic Identity Fraud Checklist for Service Providers It's Costing Millions Each Year, and it's on the Rise Your Best Defense? A Data-driven Offense Synthetic ID fraud occurs when fraudsters use parts of real identities to create a completely fake identity. Fraudsters use these synthetic identities to open new accounts for mobile phones, pay-tv, utilities and other services, with no intention of ever paying the service provider. When it comes time to pay, they're impossible to locate, forcing service providers to write off the balance. Communications, energy and digital media providers are paying the price with millions of dollars in annual losses to their bottom line. The best way to stop synthetic ID fraud is to understand it so you can quickly detect and prevent it from entering your business. Here are a few quick tips to get started. 1 Equifax Data Analysis, based on a varying performance window from 3 months (Aug'17 archive) to 21 months (Feb'16 archive) Understand the steps fraudsters take to create — and protect — their synthetic identities. Typically, a fraudster will obtain the SSN of another person and fabricate a name to be used with the SSN. They will also create false birth dates that tend to match the appearance of the fraudster in case any in-person appearances are required as well as create a fraudulent address to receive mail. Lastly, they will provide telephone numbers that will probably be untraceable or stale by the time the fraud is realized. Build a strategy by knowing how synthetic identities will be used in your business. Once synthetic identities are created, fraudsters will typically nurture them until they mature. They can introduce the synthetic identity into your business by requesting a service within a "faceless" channel, open accounts at different organizations, check their credit scores regularly, and choose the perfect time to exploit the accounts to the maximum degree possible. Since real people won't see activity on an account created with their SSN that doesn't include their exact name or address, they won't raise any red flags. When unusual activity does occur, the fraudster will promptly confirm that the suspicious activity is "legitimate" if contacted. Know the numbers so you can benchmark synthetic fraud activity within your business. In 2017, an Equifax study of the top telecommunications and energy accounts showed that of the 31 million accounts reviewed, 0.3 percent were flagged as potentially synthetic. Among those, 27 percent became delinquent, translating to a potential loss of $25 million a year. As reference, the average charge-off was $866 per account and the average wireless loss was $1,500 per account. 1 1 2 3

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