TransUnion has published new research suggesting that synthetic identity fraud has decreased during the COVID-19 pandemic. Synthetic identity fraud mixes genuine and fake information to create a false identity, which is then used to gain illegal access to bank loans, credit cards, auto loans, and the like.
Downward trend in synthetic ID fraud during the pandemic
In the third quarter of 2020, TransUnion estimates that US financial institutions had an $855 million balance in accounts believed to be linked to synthetic identities. That number was down from $1.04 billion in the third quarter of 2019, and from the high of $1.05 billion in 2018. TransUnion observed a 32 percent drop in the number of new credit cards granted to synthetic identities, and a 23 percent dip in the corresponding number of new auto loans for the twelve-month period leading up to Q3 2020. This is good news.
Despite the drop in synthetic ID fraud, TransUnion warns that financial institutions cannot afford to drop their guard, since fraudsters may be lying low and preparing to take advantage of COVID-19 relief schemes. If so, synthetic identity fraud could skyrocket in the wake of the pandemic. The Aite Group predicts that synthetic identity fraud will lead to $2.42 billion in losses for unsecured US credit products by 2023.
TransUnion encourages the use of solutions that link an individual’s personal identity to a digital one. With that in mind, the company has strengthened its synthetic fraud services with a new non-credit algorithm and plans to implement an electronic Social Security Number Verification system as soon as it receives certification from the US Social Security Administration.