In a white paper released yesterday, the Federal Reserve System documented the current state of synthetic identity fraud and its effects on the payments industry. Currently the fastest-growing type of financial crime, synthetic identity fraud typically targets children, the elderly and others who are less likely to access their credit information and uncover the fraud. One million children were victims of identity fraud in 2017, and an estimated 85% to 95% of applicants identified as synthetic identities are not flagged by traditional fraud models.
The white paper explores the causes and contributing factors of synthetic identity fraud, how it works and what its costs are likely to be.
