Revamp controls now to battle burgeoning synthetic ID fraud

Last year, CNBC reported that Indiana-based Notre Dame Federal Credit Union had been saddled with a $200,000 credit loss. The borrowers in question had met the qualifications for loan approval, but what the institution later discovered — after the loan payments stopped — was that the borrowers weren’t real people and didn’t exist at all. They were synthetic identities created by fraudsters. (See Criminals are using ‘Frankenstein identities’ to steal from banks and credit unions, by Kate Rooney, CNBC, Jan. 16, 2020.)

Since then, many more financial institutions and unsuspecting citizens have been the victims of insidious synthetic identity (SI) fraud. As people’s lives become increasingly online, mobile and detached from each other, authenticating a person’s identity is becoming increasingly challenging. Synthetic identity fraudsters are aggressively and successfully taking advantage of this difficulty, so it’s critical that fraud fighters and risk management personnel help their organizations understand just how vulnerable they may be.

Collecting pieces of personally identifiable information