Synthetic Identity Fraud: Diabolical Charge-Offs on the Rise

The majority of the firms Aite Group surveyed believe that synthetic identities are a bigger challenge than identity theft.

Boston, February 9, 2021 — Synthetic identity fraud is a pernicious issue that results when criminals fabricate identities to establish new accounts or lines of credit. Synthetics are hard to detect, and losses due to synthetic attacks are often written off as credit losses. The U.S. market is one of the hotbeds of synthetic identity fraud, given the historical lack of a centralized source of truth for consumers’ identities. While regulators and legislators are focusing on the issue, many firms are also investing in technologies to help better identify synthetic fraudsters at the time of application. Synthetic Identity Fraud: Diabolical Charge-Offs on the Rise, a new Aite Group report, examines synthetic identity fraud’s impact and best practices in combating the issue.

“Given the porous nature of the identity framework in the U.S. market, synthetic identity fraud continues to rise,” says Julie Conroy, research director at Aite Group. “Aite Group estimates that synthetic identity fraud for unsecured U.S. credit products will total US$1.8 billion in 2020, and it will grow to US$2.42 billion in 2023, emphasizing the fact that this is a hugely impactful form of fraud,” she adds.

This report, sponsored by TransUnion, defines synthetic identity fraud, sizes its impact on the U.S. unsecured credit market, and discusses best practices to address it. To inform the research, Aite Group surveyed 46 North American fraud executives in September 2020. The report also includes input and insights from ongoing Aite Group conversations with fraud executives at financial institutions and fintech lenders.

To request a press copy of this report or to speak with Julie Conroy about this topic, please contact us at [email protected].

About Aite Group:
Aite Group is a global research and advisory firm delivering comprehensive, actionable advice on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, insurance, wealth management, and the capital markets, we guide financial institutions, technology providers, and consulting firms worldwide. We partner with our clients, revealing their blind spots and delivering insights to make their businesses smarter and stronger. Visit us on the web and connect with us on Twitter and LinkedIn.

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