COVID-19 and Synthetic Identity Fraud: The Importance of Lenders Mitigating Risks

COVID-19 and Synthetic Identity Fraud: The Importance of Lenders Mitigating Risks

The COVID-19 pandemic has impacted businesses across the country with many companies needing to quickly adapt to a new normal. They have to keep their businesses afloat, while helping employees work remotely and continuing to service clients.


Unfortunately, the country has also seen an increase in fraud. Fraudsters are taking advantage of this time to target vulnerable populations and companies.


From January to mid-July 2020, according to the FTC, consumers have reported losing a total of more than $90 million to COVID-19-related fraud. Even prior to the pandemic, Experian’s 2020 Global Identity and Fraud Report – launched earlier this year – found that while business’s confidence in their ability to stop fraud was high, 57 percent of businesses had experienced rising year-on-year fraud losses, often the result of an inability to authenticate customers. Unfortunately, the increase in fraudulent activity is likely going to continue and potentially even grow when the pandemic eases.


Every day, lenders are faced with multiple types of fraud and scams – and one of the most persistently challenging is synthetic identity fraud. According to McKinsey, synthetic identity fraud accounts for 10-15% of lender losses each year, making it the fastest-growing type of financial crime in the U.S. One key step in any lending process is for lenders to verify the identity of the person applying for a credit card or a loan.


Fraudsters use combinations of real and fake information – sometimes including a minor’s social security number – to create “Frankenstein IDs” and then use these to at ..

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