Synthetic identity theft is a fast-emerging vector of financial fraud, reaching $8 billion and accounting for the majority of fraud on payment cards, according to expert estimates. Projected to double between 2014 and 2018, this form of fraud is “difficult to spot and it’s rapidly growing — and that’s not a coincidence,” says Rob McKenna, former attorney general of Washington state, on the latest episode of the ABA Banking Journal Podcast.
Synthetic ID fraud “can go for years without being detected,” adds McKenna, who is a partner at the Orrick law firm. It relies on fake identities cobbled together with unused Social Security numbers or those of children or recent immigrants — individuals unlikely to notice fraud on their credit report right away. On the podcast, McKenna joins ABA VP Brian Murphy to discuss:
- How synthetic ID fraud differs from traditional identity theft and why it’s harder to root out
- Strategies and technologies banks are using to prevent and stop synthetic ID theft, including neural networks and machine learning
- How community banks can apply resources to tackle this problem
- A key provision in S. 2155, the bipartisan regulatory reform bill, that helps by requiring the Social Security Administration to create a registry that banks can use verify the validity of SSNs.
If you can’t see the audio player above, click here to listen to this week’s episode.