Forecasters’ crystal balls are working overtime as experts attempt to predict the ongoing, far-reaching effects of the COVID-19 pandemic. Fraud has

Taking Action Against Synthetic Identity Fraud

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2021-07-23 18:00:04

Forecasters’ crystal balls are working overtime as experts attempt to predict the ongoing, far-reaching effects of the COVID-19 pandemic. Fraud has been a major concern (Off-site), including phishing and other digital scams against socially distanced consumers and businesses. This trend may accelerate as pandemic-related financial assistance comes to an end and individuals and businesses experience greater financial stress.

In an effort to help combat the emergence of synthetic identities, financial institutions, processors and fraud solution providers are putting a new tool to work: an industry-recommended definition of synthetic identity fraud (SIF) announced earlier this year by the Federal Reserve, which has already been incorporated into the FraudClassifierSM model. Awareness of synthetic identity fraud is greater than ever before across the payments ecosystem, according to fraud experts who participated in a Fed-convened focus group and helped develop this definition.

“Awareness and a common definition of synthetic identity fraud are particularly important for the small to mid-size financial institutions we serve,” said Jack Lynch, senior vice president and chief risk officer of PSCU, a cooperative serving 1,500 credit unions. “Fraudsters don’t decide to go after your credit card department alone – once they’ve used a synthetic identity to obtain a credit card, they can open a bank account and get an auto loan, too. Credit unions using a common definition across all departments can better see suspicious patterns across multiple channels and avoid misclassification of fraud as a loan loss.”

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