The use of synthetic identities has become an innovative way to commit fraud that goes beyond traditional identity theft.
A synthetic identity combines fake credentials to create a bogus identity that isn’t connected to a real person. To commit synthetic identity fraud, bad actors may use potentially genuine social security numbers (SSNs) and fraudulent personally-identifying information (PII).
Since these identities are an assortment of different details, there is no identifiable victim in this kind of fraud, which often goes undetected. Fraudsters can even keep accounts active for years before they’re exposed, making it one of the most challenging cybercrimes to uncover and address.
3 Ways Synthetic Identities Can Be Created
Awareness is key to fighting this kind of felony online. Here are three ways synthetic identities are created, helping you to understand them as part of preventing synthetic identity fraud from happening.
Identity fabrication describes a fraudster creating a fictitious identity without any real PII to help them carry out fraudulent activity. Bad actors start by using a legitimate social security number and adding a fake address, phone number, and even a social media account to create a synthetic identity.
Identity manipulation is the alteration of real PII. The fraudster may change a real identity in specific parts, such as gender, age, name, and other details.
Identity compilation happens when the fraudster skillfully combines legitimate PII with manufactured personally-identifying information. They can use an unsuspecting victim’s social security number, name, or address and combine that with other identifying details like a telephone number, email address, etc.
Additional PII details include indirect identification, such as gender, race, birth date, geographic indicator, and other descriptors.
6 Characteristics of Synthetic Identities
1. Same social security number
Using the same SSN repeatedly could be a sign of synthetic identity theft. Since each SSN is unique, it makes no sense for two people to have the exact number. Organizations can detect a possible fraudulent activity and get a head start on investigations if needed. Try using identity proofing systems to help you catch these scammers fast.
2. Same personal details to create accounts
Synthetic fraud is characterized by the use of both real and false information. A scammer might, for instance, combine a phony identity with a legitimate address and phone number.
Today, fraudsters can easily get genuine personal information. According to Privacy Affairs, a cloned card with a PIN can be sold for $35, credit card details for as little as $12, and stolen online accounts with a minimum balance of $2,000 can go for $65 on average.
Due to these low access costs, producing numerous synthetic identities at scale is more straightforward, which presents many difficulties for fraud prevention teams.
3. Misaligned credit file and customer profile
You can study a customer’s credit history to identify any possible fake identities. Fraudsters frequently establish their credit histories by making and repaying small purchases. However, a real customer’s credit profile should be much more extensive with a more comprehensive credit history.
4. Addresses near airports or shipping destinations
According to the U.S. Federal Reserve-published whitepaper in 2019, many fake identities have locations close to major shipping hubs or international airports. This makes it easy for scammers to collect things and vanish without being discovered.
5. Identities are created from the same IP address
IP addresses can be considered the SSNs of devices. When numerous accounts use the same IP address, it might result from one person or several automated programs attempting to impersonate various users. Remember to regularly inspect the IP addresses as a best practice to ensure that you aren’t falling victim to any fraudulent activity like synthetic identity fraud.
6. Multiple authorized users on the same account
The presence of several authorized users in a single account, especially those who don’t seem connected, is a cause for concern. This can point to a sophisticated fraudulent scheme with a vast network of criminals waiting to jump on the wagon.
Keep Your Systems Updated
There are numerous ways fraudsters can get the one up on you. Unfortunately, they’re evolving with their tactics. The best way to combat their schemes is to prepare and be watchful. Try implementing an identity and access management (IAM) system to help reinforce your organization’s security while conducting smooth transactions.
A robust IAM system can help prevent fraud from happening and prepare you for any future attacks so that you can stay vigilant. If you’re looking for an effective authentication security system, Q5id offers solutions based on years of industry experience to help secure your data.
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