Tag: SSA

It’s Halloween time – time for trick or treating, costume parties and monsters lurking in the background. But this year, the monsters aren’t just in the background. They’re in your portfolio.  This year, “Frankenstein” has another meaning. Much more ominous than the neighbor kid in the costume.   “Frankenstein IDs” refer to synthetic identities — a type of fraud carried out by criminals that have created fictitious identities. Just as Dr. Frankenstein’s monster was stitched together from parts, synthetic IDs are stitched together pieces of mismatched identities — some fake, some real, some even deceased.   It typically takes fraudsters 12 to 18 months to create and nurture a synthetic identity before it’s ready to "bust out" – the act of building a credit history with the intent of maxing out all available credit and eventually disappearing. That means fraudsters are investing money and time to build numerous tradelines, ensure these "fake" identities are in good credit standing, and ultimately steal the largest amount of money possible.   “Wait Master, it might be dangerous . . . you go, first.” — Igor   Synthetic identities are a notable challenge for many financial institutions and retail organizations. According to the recently released Federal Reserve Board White Paper, synthetic identity fraud accounts for roughly 20% of all credit losses, and cost U.S. businesses roughly $6 billion in 2016 with an estimated 41% growth over 2 years. 85-95% of applicants identified as potential synthetic are not even flagged by traditional fraud models.   The Social Security Administration recently announced plans for the electronic Consent Based Social Security Number Verification service – pilot program scheduled for June 2020. This service is designed to bring efficiency to the process for verifying Social Security numbers directly with the government agency. Once available, this verification could be an important tool in the fight against the elusive “Frankenstein” identity monster.   But with the Social Security Administration's pilot program not scheduled for launch until the middle of next year, how can financial institutions and other organizations bridge the gap and adequately prepare for a potential uptick in synthetic identity fraud attacks? It comes down to a multilayered approach that relies on advanced data, analytics, and technology — and focuses on identity.   Any significant progress in making synthetic identities easier to detect could cost fraudsters significant time and money.   Far too many financial institutions and other organizations depend solely on basic demographic information and snapshots in time to confirm the legitimacy of an identity. These organizations need to think beyond those capabilities. The real value of data in many cases lies between the data points. We have seen this with synthetic identity — where a seemingly legitimate identity only shows risk when we can analyze its connections and relationships to other individuals and characteristics.   In addition to our High Risk Fraud Score, we now have a Synthetic Fraud Risk Level Indicator available on credit profiles. These advanced detection capabilities are delivered via the simplicity of a straightforward indicator returned on the credit profile which lenders can use to trigger additional identity verification processes.   While there are programs and initiatives in the works to help financial institutions and other organizations combat synthetic identity fraud, it's important to keep in mind there's no silver bullet, or stake to the heart, to completely keep these Frankenstein IDs out.   Oh, and don’t forget… “It’s pronounced ‘Fronkensteen.’ ” — Dr. Frankenstein

Experian is excited to have been chosen as one of the first data and analytics companies that will enable access to Social Security Administration (SSA) data for the purposes of verifying identity against the Federal Agency’s records. The agency’s involvement in the wake of Congressional interest and successful legislation will create a seismic shift in the landscape of identity verification. Ultimately, the ability to leverage SSA data will reduce the impact of identity fraud and synthetic identity and put real dollars back into the pockets of people and businesses that absorb the costs of fraud today. As this era of government and private sector collaboration begins, many of our clients and partners are breathing a sigh of relief. We see this in a common question our customers ask every day, “Do I still need an analytical solution for synthetic ID now that eCBSV is on the horizon?” The common assumption is that help is on the way and this long tempest of rising losses and identity uncertainty is about to leave us. Or is it? We don’t believe it’s the end of the synthetic ID storm. This is the eye. Rather than basking in the calm light of this moment, we should be thinking ahead and assessing our vulnerabilities because the second half of this storm will be worse than the first. Consider this: The people who develop and exploit synthetic IDs are playing a long game. It takes time, research, planning and careful execution to create an identity that facilitates fraud. The bigger the investment, the bigger the spoils will be. Synthetic ID are being used to purchase luxury automobiles. They’re passing lender marketing criteria and being offered credit. The criminals have made their investment, and it’s unlikely they will walk away from it. So, what does SSA’s pending involvement mean to them? How will they prepare? These aren’t hard questions. They’ll do what you would do in the eye of a storm — maximize the value of the preparations that are in place. Gather what you can quickly and brace yourself for the uncertainty that’s coming. In short, there’s a rush to monetize synthetic IDs on the horizon, and this is no time to declare ourselves safe. It’s doubtful that the eCBSV process will be the silver bullet that ends synthetic ID fraud — and certainly not on day one. It’s more likely that the physical demands of the data exchange, volume constraints, response times and the actionability of the results will take time to optimize. In the meantime, the criminals aren’t going to sit by and watch as their schemes unravel and lose value. We should take some comfort that we’ve made it through the first half of the storm, but recognize and prepare for what still needs to be faced.

Experian has been named one of the 10 participants, and only credit bureau, in the initial rollout of the SSA's new eCBSV service.