The US Federal Reserve System has released a new White Paper that calls attention to the growing threat of synthetic identity fraud. The paper defines a synthetic identity as one that combines false information – such as a fake name or date of birth – with legitimate information like a social security number that has been stolen.
According to the Federal Reserve, fraudsters will build up credit with the synthetic identity before disappearing with a series of expensive purchases. The culprit is difficult to trace because the identity was never real in the first place, while the victim whose SSN was stolen may face issues with their disability benefits, tax returns, and health records until they can sort out the confusion and correct their credit report.
“Crime rings see attractive opportunities in synthetic identity payments fraud,” said Ken Montgomery, the Chief Operating Officer at the Federal Reserve Bank of Boston, who also serves as the payments security strategy lead for the Federal Reserve System. “Unfortunately, many consumers don’t realize how it can hurt their access to credit or how to protect themselves.”
The Federal Reserve is not the only organization raising concerns about identity theft. Earlier this year, HSB released a report suggesting that identity theft is on the rise, while companies like BioCatch and IDEX Biometrics have repeatedly pitched biometric technology as a potential solution to the problem. The new white paper is less prescriptive, but it does highlight the need for better security measures at both the public and private level.
July 15, 2019 – by Eric Weiss