Criminals are using ‘Frankenstein identities’ to steal from banks and credit unions

ronjor · Jan 16, 2020

Kate Rooney@Kr00ney Jan 16 2020

So-called synthetic identity fraud is the fastest-growing financial crime, according to the Federal Reserve, driven in part by lending moving online. It’s also one of the hardest to detect.
Instead of outright stealing an identity, a criminal makes one up in what’s sometimes called a “Frankenstein” identity. The criminal then spends years building up credit under a fake alias.
“It’s a really long con and an expensive one,” says Naftali Harris, co-founder and CEO of San Francisco-based start-up SentiLink. “But once you have this fake person who has an 800 credit score, you can then use that to get multiple high limit credit cards and unsecured loans from banks.”
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guest · Jul 2, 2020

Federal Reserve shares tips on mitigating synthetic identity fraud
July 1, 2020
https://www.bleepingcomputer.com/ne...-tips-on-mitigating-synthetic-identity-fraud/

The U.S. Federal Reserve today issued guidance on how financial organizations from the United States can mitigate payment fraud attempts scammers carry out with the help of synthetic identity accounts.
The white paper published today by the Federal Reserve on mitigating synthetic identity payments fraud comes after two previous white papers on defining and detecting such payments fraud attempts.

Synthetic identities are created by fraudsters after combining real information (like Social Security Numbers) and fake information (names, dates of birth, and addresses).
They are subsequently used for creating new accounts that might escape common ineffective fraud detection models, accounts that might be portrayed as credit-worthy account holders.

"This affords perpetrators the time to cultivate these identities, build positive credit histories, and increase their borrowing or spending power before 'busting out' – the process of maxing out a line of credit with no intention to repay," the Federal Reserve explains.
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Synthetic identity payments fraud mitigation measures
A multi-layered approach including manual and technological data analysis is recommended to organizations that want to have the best chance to detect and mitigate financial fraud attempts were synthetic identities are used.

Financial institutions are also advised to share information across product lines to allow for easier discovery of common tactics of synthetic identity fraudsters such as opening multiple accounts (credit card, direct deposit account, line of credit, auto loan, or mortgage) at the same organization.
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Criminals are using ‘Frankenstein identities’ to steal from banks and credit unions

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