What Exactly is Synthetic ID Theft and Fraud?

[Jeff Kershner]

Anyone familiar with Synthetic ID Theft and Fraud?

Identity theft and fraud utilizing "Synthetic ID fraud" is something I personally had never heard nor was aware of (term Synthetic ID) until a friend and former co-worker - Kelly - alerted me to it. Kelly landed a job with Equifax awhile back and was filling me on the what/how this newer form of ID theft is effecting automotive dealerships nationwide.

"Fraudulent synthetic identity accounts that go undetected for 24 months drive estimated total losses of $200 million per month across ALL industries — $2 billion annually..."

I added their 2 page overview on some of the statistics and risk assessment results to our DealerRefresh Resources. The 2 pager does also promote a new Equifax service - FraudIQ® - designed to help dealerships detect synthetic identity fraud earlier so dealers can:

• Avoid chargebacks
• Mitigate fraud losses
• Maintain lender relationships
• Better protect your bottomline

BUT the purpose of the resource is NOT to promote Equifax, but instead to help bring about more awareness to Synthetic ID fraud.

ANYONE aware of OR have been a victim of Synthetic ID fraud?

I've also included a few links to additional resources on the information around synthetic identity fraud:

What is synthetic identity theft and how does it work?

Learn how to stop fraudsters from using your personal information for synthetic identity theft.

www.lifelock.com

5 Ways To Protect Yourself From Scammers This Tax Season

Tax identity theft is a real threat for millions of Americans. In 2023 alone, the IRS identified over $5.5 billion in fraud resulting from tax identity theft and tax refund scams. Identity thieves use stolen information to file fraudulent tax returns in your name, or they may use the stress of ta

www.forbes.com

How Criminals Are Using Synthetic Identities for Fraud

Organizations must improve their cybersecurity protocols to detect fraudulent identities and make sure they're safeguarding their consumers’ personal information.

www.darkreading.com

Identity & Fraud Services | Business | Equifax

With identity and fraud services from Equifax, lenders can detect and prevent fraud, verify identities, and safeguard revenue with advanced analytics.

equifax.com

 

[Ken Luna]

At this point we (CreditMiner) are pretty familiar with Synthetic Fraud. It is a particularly insidious deception that is built over a period of months and in some cases, years. It is a crafted fake identity that is slowly nurtured over time to become what looks like a real person to dealerships and lenders. The articles you give are excellent. Their are many more for those who are interested. There are various levels of identifying these "frankenstenian" entities including extensive background and technical real time analysis. The best of these are highlighted by a report Javelin did in 2020 (I can send you if you like). These "checks" are good but not good enough in many cases. It actually takes a real time document check along with a "same time" proof of life selfie to really flush out or in reality, discourage these thieves.

We have heard various loss numbers in automotive but almost all are over 1 billion dollars a year! Interesting that something this huge has been layingin the weeds all this time. Maybe dealers and lenders don't want to discuss these losses? Regardless, the time is now to battle this problem. Please check your LinkedIn mail for more information. Thanks, Ken

 

[Jeff Kershner]

At this point we (CreditMiner) are pretty familiar with Synthetic Fraud. It is a particularly insidious deception that is built over a period of months and in some cases, years. It is a crafted fake identity that is slowly nurtured over time to become what looks like a real person to dealerships and lenders. The articles you give are excellent. Their are many more for those who are interested. There are various levels of identifying these "frankenstenian" entities including extensive background and technical real time analysis. The best of these are highlighted by a report Javelin did in 2020 (I can send you if you like). These "checks" are good but not good enough in many cases. It actually takes a real time document check along with a "same time" proof of life selfie to really flush out or in reality, discourage these thieves.

We have heard various loss numbers in automotive but almost all are over 1 billion dollars a year! Interesting that something this huge has been layingin the weeds all this time. Maybe dealers and lenders don't want to discuss these losses? Regardless, the time is now to battle this problem. Please check your LinkedIn mail for more information. Thanks, Ken

@Ken Luna - Thanks for adding this additional information behind Synthetic ID Fraud. Quite intense, fraud for the "long game."

 

[beawesomelee11]

@Jeff Kershner — It's interesting to stumble across this. Synthetic identity has now jumped from $2B to $8B for the auto industry which is now 14x of credit cards...I understand that often, these look like credit losses rather than outright fraud, but this is quite crazy.

A dealership I recently consulted for mentioned being on the hook for more of these fraud cases than they traditionally were. Is this the case for most dealerships? I'm assuming these fraud attacks are much easier due to online sales.

I've saved multiple banks hundreds of millions of dollars from synthetic identity fraud. I would love any insight into how synthetic identity fraud is happening in the automotive industry to help create a solution.

 

[Carsten]

Don't worry eventually we all will have biometric markers that will save us from identity theft.
It will be good for us! We'll even be able to get rid of keys and cards to enter buildings.

The 3 bureaus would love to be able to harvest even more data on you and then manage it for you so that you have to subscribe to them even more!

 

[Ryan Everson]

Most lenders use PointPredictive, it's essentially a private credit bureau consortium where they pool lender data of past applications (among many other data sources) to determine a fraud score.

It's not adverse actionable, but if you ever get a callback with insane stipulation requests (IRS tax transcripts), you know the customer probably triggered their fraud algorithm.

 

[jscole86]

Most lenders use PointPredictive, it's essentially a private credit bureau consortium where they pool lender data of past applications (among many other data sources) to determine a fraud score.

It's not adverse actionable, but if you ever get a callback with insane stipulation requests (IRS tax transcripts), you know the customer probably triggered their fraud algorithm.

They do have a dealer side tool as well.

 

[beawesomelee11]

They do have a dealer side tool as well.

Are dealers ever financially responsible for synthetic identity fraud?

 

[jscole86]

Are dealers ever financially responsible for synthetic identity fraud?

100%. It's pretty much baked into every lender agreement you sign.

 

[beawesomelee11]

100%. It's pretty much baked into every lender agreement you sign.

That's wild. Is there an appetite for a synthetic identity fraud solution? Or do existing tools easily prevent this type of fraud? I would imagine dealerships want to focus on selling (even online) rather than spending their time preventing fraud.