How to spot synthetic identities, aka, imaginary people, in your database.
10/19/2018 11:30
You’ve likely all seen the skiptracing situations where, no matter who is working the file and no matter how good they are, there are just some people you cannot find. The data coming back from the databases doesn’t match up, it doesn’t make sense and it isn’t complete.
You do a Social Security number search, and it comes back with a different name; you do an address search, and it comes back with still another name. Relatives don’t match up, and nothing seems to make sense. The consumer seems to not exist.
One reason for this may be that your consumer actually doesn’t exist, Linda Straub Jones, director of collections compliance for LexisNexis Risk Solutions, writes in a report for the October issue of Collector magazine. It’s an account that has various elements that are real, but when you put those elements together, they are not for the same person— you have synthetic fraud.
Synthetic identities can develop on longer timelines than other types of fraud because there is no victim to report the identity compromise, according to Straub Jones. As a result, it’s important for fraud analysts to review longitudinal behavior, capturing identity transformations over longer periods than are typical for other fraud schemes. This can be a crucial identifying signal.
Along with the obvious losses, this type of fraud fuels a vibrant black market, where criminals buy and sell credit account and identity information used for a variety of fraud types.
Recent large-scale data breaches at major corporations will no doubt contribute to this fraud. With the availability of more Social Security numbers, names and addresses on the black market than ever before, we can in turn expect to see even more fraudulent account openings in the coming months and years.
Additionally, the introduction of Social Security number randomization in June 2011 made it more difficult for U.S. banks to assess the authenticity of consumer applications. Fraudsters have capitalized upon this opportunity to create a credit privacy number (CPN), which can be used in place of a Social Security number.
In her report, Straub Jones delves into the scope of the problem of synthetic fraud and tips for a collection agency to determine if accounts are connected to synthetic identities.
Read the complete article in the October issue of Collector magazine.
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