The threat of identity theft in the online world has become all-pervasive. As per a recent report, in the past two years, almost half (47%) of US consumers surveyed experienced identity theft. The study also found that losses from identity theft cases in the US were $502 billion in 2019 and increased 42% to $712 billion in 2020. As online identity theft increases in number, enterprises are now faced with varying types of identity theft to deal with.
One of the most common types of identity theft is synthetic identity theft. Synthetic identity theft is a type of fraud in which a criminal combines real and fake information to create a new identity. This information is used to open fraudulent accounts and make fraudulent purchases. Victims of synthetic identity theft are typically left with damage to their credit, finances, and reputation. Fraudsters who commit synthetic identity theft steal information from unsuspecting individuals to create a synthetic identity. They steal Social Security numbers (SSNs) and couple that with false information like names, addresses, and even dates of birth. Because there is no clearly identifiable victim in this kind of fraud, it often goes unnoticed.
People who commit synthetic identity fraud can use multiple identities simultaneously and may keep accounts open and active for long durations before the fraud is even detected. There are three ways in which fraudsters create synthetic identities:
Synthetic identity theft is quite different from traditional identity theft. As mentioned above, the person behind the synthetic variety uses both real and made-up information in order to create a new identity. Synthetic identity theft is difficult to spot as well because there is not a victim reporting the activity right away because of the nature of how they are created. As per a report from the Federal Reserve, the largest synthetic ID ring detected to date in the US caused $200 million (or more) in losses from 7,000 synthetic IDs and 25,000 credit cards. Another recent report estimates that synthetic identity fraud for unsecured credit products in the US will grow to $2.4 billion by 2023.
As more and more people transact online, it becomes imperative for businesses to tackle the rising menace of synthetic fraud. The fact that fraudsters target individuals who are new to the online world makes it even more important as it creates a fear in the mind of new users, making them more reluctant to embrace the online experience. Enterprises will also have to figure out the right verification tools to ensure that genuine customers are not denied access owing to incorrect identification of their credentials.
Synthetic identity fraud works on creating profiles of individuals using real and fake information. One of the most important identifiers of any individual these days is their mobile phone number. Businesses generally use SMS-based one-time-passcodes (OTP) as a form of authenticating possession of the consumer’s phone. However, synthetic identity fraud committed by creating genuine identity data of a victim and associated with a different phone number can easily circumvent OTPs. The fact that most businesses do not keep their customer contact information current and updated compounds the problem. To ensure that a phone number is truly associated with the right identity, enterprises need to implement a single, centralized, and reliable registry of identities that manages all valid phone numbers associated with the individual. To tackle this, enterprises have to go beyond mere phone number verification and look at Phone-Centric Identity™.
Phone-Centric Identity™ relies on billions of signals from authoritative sources pulled in real-time, making it a powerful proxy for digital identity and trust. Phone-Centric Identity™ signals—which include phone line tenure; phone behavior such as calls, texts, logins, and ad views; phone line change events as ports, snap-backs, true disconnects, and phone number changes; phone number account takeovers such as SIM swaps; and velocity and behavior of change events—are both high-depth and high-consistency. Phone-Centric Identity™ plays a crucial role in fighting synthetic fraud by analyzing three crucial three factors: Possession, Reputation, and Ownership.
Possession: Knowing that someone is in possession of a phone at the precise moment of a potential transaction helps identify someone regardless of the transaction channel and helps ensure the customer is indeed on the other end of an interaction.
Reputation: Typically, people have had the same phone number for a long time and upgrade phones only every few years. Activities such as SIM swap or recent phone number registration lower the reputation of the phone itself, which allows companies to flag the phone regardless of the customer activity.
Ownership: It is crucial to associate a phone number with a person when confirming that the customer is in possession of the phone.
Prove Identity Manager™ is a registry of tokenized identities that persists and manages only genuine primary and associated household phone numbers of the customer, thereby eliminating fraudulently created phone numbers out of the reckoning.
Prove Identity Verify™ utilizes the phone number to verify consumer identity. It relies on various phone intelligence attributes that are paired with device information and data from authoritative identity verifiers to enhance the efficacy and accuracy of identity verification and authentication.
To learn about Prove’s identity solutions and how to accelerate revenue while mitigating fraud, schedule a demo today.
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