TransUnion has published new research that suggests that synthetic identity fraud has gone down during the COVID-19 pandemic. Perpetrators of synthetic identity fraud use a mix of real and fake information to generate a false identity, and then use that identity to gain illegitimate access to loans, credit cards, and other forms of funding.
As of the third quarter of 2020, TransUnion estimates that US financial institutions have an $855 million balance in accounts that are suspected to be linked to synthetic identities. That number is down from $1.04 billion in the third quarter of 2019, and from the high of $1.05 billion that it reach the year prior. In that regard, TransUnion observed a 32 percent drop in the number of new credit cards granted to synthetic identities, and a 23 percent dip in the corresponding number of new auto loans for the twelve-month period leading up to Q3 2020.
While those numbers are promising, TransUnion warned that financial institutions cannot afford to drop their guard when it comes to synthetic identities. The company suggested that fraudsters could be biding their time, and may be preparing to take advantage of COVID-19 relief schemes. If so, synthetic identity fraud could skyrocket in the wake of the pandemic, with TransUnion citing the Aite Group’s prediction that synthetic identities will lead to $2.42 billion in losses for unsecured US credit products by 2023.
To combat the problem, TransUnion encouraged the use of solutions that link people’s personal identities to a digital one. With that that in mind, the company has already updated its own products to meet the growing demand for effective anti-fraud technology. Most notably, the company has bolstered its synthetic fraud services with a new non-credit algorithm, and plans to implement an electronic Social Security Number Verification system as soon as it receives certification from the US Social Security Administration
TransUnion’s synthetic fraud solutions are available through its TruValidate suite, which analyzes information and behavior patterns to spot anomalous activity. The platform helps reduce synthetic fraud without adding more friction for legitimate users.
TruValidate was formerly known as iovation’s IDvision platform. TransUnion acquired iovation in 2018, and has since partnered with Bitventure to provide mobile onboarding services in South Africa. The company has also argued that businesses that offer digital payments have a better chance of making it through the COVID-19 pandemic.
(Originally posted on FindBiometrics)