CHICAGO--(BUSINESS WIRE)--The Federal Reserve today released the latest in a series of publications about synthetic identity fraud – a white paper titled Mitigating Synthetic Identity Fraud in the U.S. Payment System.
“Organizations have the best chance of identifying synthetics if they use a layered fraud mitigation approach that incorporates both manual and technological data analysis,” said Jim Cunha, secure payments strategy leader and senior vice president at the Federal Reserve Bank of Boston. “In addition, sharing information both internally and with others across the payments industry helps organizations learn about shifting fraud tactics.”
A synthetic identity is created by using a combination of real information (such as a legitimate Social Security number) and fictitious information (which can include a false name, address or date of birth). Synthetic identities can be used to establish accounts that behave like legitimate accounts and may not be flagged as suspicious using conventional fraud detection models. 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 white paper examines factors that influence synthetic identity fraud mitigation, including:
- Technological advancements, such as artificial intelligence and machine learning
- Regulatory and environmental influences
- Information sharing and data integrity
Visit FedPaymentsImprovement.org to learn more and to read the Federal Reserve’s latest white paper, Mitigating Synthetic Identity Fraud in the U.S. Payment System.
About the Federal Reserve and Payments
As the U.S. central bank, the Federal Reserve System provides payment services and seeks to foster the stability, integrity and efficiency of the nation’s monetary, financial and payment systems. In 2013, the Federal Reserve initiated a broadly collaborative effort to achieve ubiquitous, nationwide access to safe and efficient faster payments in the United States. The Federal Reserve now collaborates with industry stakeholders to advance five desired outcomes outlined in the 2015 Strategies for Improving the U.S. Payment System paper: speed, security, efficiency, international payments and collaboration. Visit FedPaymentsImprovement.org for more information, and to read other white papers in our Payments Fraud Insights series.