Federal Reserve Shines a Spotlight on Synthetic Identity Fraud

Back in June, the Federal Reserve released a white paper that takes a deep dive into the subject of synthetic identity fraud.

The report – the latest in a series – discusses the context to the growing incidence of this kind of fraud, while listing factors that are crucial to mitigating its prevalence, including technological advancements like artificial intelligence (AI) and machine learning (ML) as well as regulatory influences and information sharing.

Most examples of synthetic identity fraud are perpetrated by fraudsters who combine real information such as names and Social Security numbers (SSNs) with fictitious data to create plausible new identities. These fraudsters often incorporate the personally identifiable information (PII) they’ve acquired on the dark web to create realistic identities that are hard to detect using conventional fraud detection models.

‘Hard to detect’ may well be an understatement: the authors of the paper point to an ID Analytics study that estimates traditional fraud models are ineffective at catching 85% to 95% of likely synthetic identities.

If that’s true, it amounts to a vast torrent of fraud that’s simply passing undetected – at the same time costing businesses a fortune.

A spokesperson for the Federal Reserve concluded that organizations had the best chance of flagging synthetics – and of minimizing losses – by using a ‘layered fraud mitigation approach’ incorporating both ‘manual and technological data analysis’.

A multi-level approach to fraud detection

It’s an approach that resonates with us here at Imperium. We’ve been developing anti-fraud and data integrity solutions for over fifteen years and have engineered a robust range of solutions that are designed to operate in concert to deliver the most comprehensive toolkit available to market research companies.

Recently, we’ve been refining – and redefining – our data quality solutions to ensure our customers have access to 360-degree protection, enabling them to maintain absolute data integrity at all times.

Our flagship ID-validation tool RelevantID® is designed to map survey respondents’ ID against dozens of data points to create a fraud profile, as well as to screen for duplicate users attempting to join the same survey. But, as fraudsters adopt increasingly sophisticated approaches against a backdrop of tighter privacy laws, we’ve recognized the need to further develop and diversify the way that RelevantID® operates. Which is why we’ve introduced a couple key upgrades and additions to the tool.

The big news is that we’ve decided to incorporate our powerful fraud-blocking tool – Fraudience® – into RelevantID® at no additional cost. Companies currently utilizing RelevantID® will now automatically enjoy access to the benefits of Fraudience® – a solution that monitors respondents’ behavior patterns against our proprietary algorithm (based on 3 billion transactions) to identify potentially fraudulent respondents. This upgrade will boost RelevantID®’s ability to catch dupes and fraudsters by passively monitoring machine information, as well as respondent behavior, creating the most robust and accurate solution in the market.

We’ve also enhanced RelevantID® with a FraudProbabilityScore. This score utilizes a machine learning (ML) model that assesses both passive and behavioral data, returning an extremely precise fraud assessment which catches more fraud, bots, and jumpers/ghost completes.
We’re confident that RelevantID® now offers a genuinely multi-level approach to fraud detection that cleverly fuses passive machine data with behavioral data to provide a detailed picture of respondents’ fraud potential. When deployed with Imperium’s OE response-validation tool Real Answer®, we believe our clients wield a potent weapon in the fight against fraudsters.

Making the right connections

The extensive link-analysis process that’s a core part of Imperium’s survey data quality solutions mirrors Federal Reserve recommendations that multiple instruments should be checked and cross-checked to identify relationships or common characteristics of synthetic identities in order to combat the most sophisticated fraud technologies.

Imperium solutions are:

  • Cloud-based and platform-independent
  • Invisible to users with no impact on experience
  • Customizable with flexible deployment options
  • GDPR- and CCPA-compliant

If you’d like to learn more about our full-featured response or to request a free trial, contact us at sales@imperium.com to discuss your requirements with an expert member of our team.