Synthetic identity fraud is estimated to account for 85% of all fraud and an estimated $20B in losses for US financial institutions in 2020 alone.
By mixing real and fake data, fraudsters are able to work around traditional fraud prevention measures, making synthetic fraud more complicated to detect. It's a dangerous new frontier of fraud that’s costing American businesses billions in losses.
As the central bank of the United States, the Federal Reserve works with the payments industry in the US to ensure the strength and security of the payments system. Their Synthetic Identity Fraud Mitigation Toolkit is the latest release in their Payments Security strategic initiative, designed to help American businesses understand how to identify and stay on top of synthetic fraud risks.
The toolkit includes guidelines and best practices for companies to detect synthetic ID fraud. Onfido, the leading global provider of automated identity verification and authentication solutions, is highlighted as a Fraud Mitigation Service Provider in the toolkit.
As the Fed notes, the best prevention measure for companies is to take a holistic approach to fraud prevention, and analyze applicants at multiple points utilizing different verification methods. Document verification and consent-based Social Security Number Verification (eCBSV) can be important first steps to weeding out fraudsters, but more advanced technology checks can also play an important role. By leveraging Machine Learning to understand different suspicious patterns, companies can stop fraudsters before they cause losses.
A recent report published by the American Bankers Association states “[t]he best way to combat synthetic identities is by strengthening up-front verification of credentials when a customer first tries to open an account.
The Onfido Real Identity Platform, as highlighted in the toolkit, combines the best practices noted to give companies a holistic view of their would-be customers. The Real Identity Platform provides companies with end-to-end identity verification and orchestration, and empowers companies to combine multiple fraud-detection signals that can paint a clearer picture of an individual.
Within the Real Identity Platform, businesses can orchestrate Onfido’s award-winning document and biometric verification checks alongside critical fraud detection signals like device intelligence and repeat attempts. When combined with data verification checks — whether Social Security numbers, ID records, or the American Association of Motor Vehicle Administrators records — companies can feel confident that fraudsters are being found out. Already used by companies like Koho, Revolut, and Chipper Cash, the Onfido Real Identity Platform has prevented millions of dollars worth of fraud.