Instances of synthetic fraud are slowing: report
Synthetic fraud has slowed in the last year for several types of loans, according to new data from TransUnion.
Synthetic identity fraud is when a fraudster creates a fictitious identity by combining real components of an identity with fake information. The goal is to open a fraudulent account. This type of fraud has either declined or slowed over the last year for auto, credit card, retail credit cards and personal loans, TransUnion said on Tuesday.
“Fraud has been a pressing issue over the last three to four years,” Geoff Miller, TransUnion’s head of global fraud and identity solutions, said in an interview with Credit Union Journal. “The figures have grown pretty dramatically in a now billion-dollar problem in the financial services industry.”
Total synthetic fraud balances inched up to $1.02 billion in the second quarter, up about 1% from a year earlier. But compared to previous years, the growth rate is down significantly. For instance, total balances jumped by almost 39%, to $854.4 million, in the second quarter of 2016 from the same period a year earlier.
According to Miller, combining a device-based view of consumers with an identity-based view of consumers is one method of eliminating bad actors.
That’s why TransUnion and iovation, which TransUnion acquired in 2018, are creating a new fraud prevention product that uses personal and digital identities to detect threats. The offering will heavily rely on artificial intelligence and machine learning insight.
The new product offering also comes at a time when more digital transactions are happening on mobile devices. As mobile becomes the platform of choice for consumers, fraudsters are targeting it more.
“The device is the lynchpin to fighting synthetic fraud by identifying if it has previously been associated with a synthetic identity and if it’s been used to open up an abnormally high number of accounts in a short period of time,” Greg Pierson, CEO of iovation, said in a press release. “Utilizing personal and digital identities is a unique approach to battling fraud, and we believe the continued and increased use of these solution sets will help identify more fraudsters while protecting revenue.”