How can the payments industry detect synthetic identity fraud, the fastest-growing type of financial crime in the U.S. according to industry experts? Why do many traditional fraud models fail to detect this type of fraud, one that cost U.S. lenders an estimated $6 billion and accounted for 20% of credit losses in 2016 alone?
Today, the Federal Reserve released the latest white paper in its Payments Fraud Insights series, Detecting Synthetic Identity Fraud in the U.S. Payment System, to call attention to these questions. This paper, compiled using secondary research and insights from industry subject matter experts, is intended to educate industry professionals about the characteristics and behaviors that indicate potential synthetic identities in the account application, “sleeper” and “bust-out” phases.
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