The Rising Tide of Synthetic Identity FraudAmong the many challenges currently faced by fraud and compliance experts, one trend that's impossible to ignore is the astronomical rise of synthetic identity fraud (SIF). In 2022, PayPal's revelation of 4.5 million "illegitimately created" accounts was a wake-up call for many in our industry. But for those of us on the frontlines of fraud prevention, it was a confirmation of what we'd long suspected: traditional methods of identity verification are no longer sufficient.
The numbers are staggering. We're looking at potential losses of $23 billion in the U.S. alone by 2030, according to Deloitte. What's more alarming is the 132% increase in global digital fraud losses in 2023 compared to the previous year. These aren't just statistics; they represent real businesses and consumers bearing the brunt of increasingly sophisticated fraud tactics.
Why Traditional Approaches Fall Short
In our conversations with financial institutions and digital service providers, we often hear the same concern: how to find the right balance between robust security and seamless user experience? It's a complex challenge and one that traditional identity checks alone can't solve.
The problem lies in the nature of synthetic identity fraud itself. Unlike traditional identity theft, SIF involves creating entirely new, fictitious identities. These 'Frankenstein IDs' are crafted with patience and precision, looking perfectly legitimate at first glance and getting tested across multiple platforms by fraudsters. For this reason, it is extremely hard to spot this type of identities with conventional detection systems, which typically focus on immediate, high-risk activities.
The impact extends far beyond individual financial losses. It erodes trust in financial systems, increases operational costs, and can have lasting consequences for real individuals whose information was partially used in these synthetic identities. As more data breaches occur, fraudsters gain access to an ever-expanding pool of real personal information to fuel their schemes.
Silent Onboarding Breaks New Ground in Fraud Prevention
At Trustfull, we realized early on that fighting synthetic identity fraud needed a new approach. This insight inspired us to create Silent Onboarding, a solution designed to future-proof companies' fraud prevention strategies.
Silent Onboarding operates on a simple yet powerful principle: leveraging alternative data to evaluate the potential risk of users in real-time, without any impacts on their sign-up experience. By analyzing digital signals from phone numbers, email addresses, and IP addresses, we generate a real-time digital risk score. This allows businesses to swiftly identify and block suspicious users and likely synthetic identities, adding a robust layer of security to existing verification processes.
What sets our approach apart is its seamless integration and adaptability. Through a single API, businesses can easily incorporate this powerful tool into their existing onboarding journeys.Our platform offers several key features that set it apart from similar solutions on the market:
1. Advanced Identity Graph: this visual tool allows fraud teams to map and analyze suspicious connections between users, unveiling complex fraud networks that might otherwise go undetected.
2. No-code Rule Engine: companies can customize risk models to their specific needs without deep technical expertise, ensuring adaptability to evolving fraud patterns.
3. Explainable Scorecard: fraud teams get access to transparent insights into risk calculations, clearly illustrating the factors driving each user's risk rating.
4. Actionable Insights: we don't just identify risks; we provide valuable data to help businesses refine and improve their risk strategies over time.
Silent Onboarding: Shaping Risk Intelligence for Global Fraud Prevention
The true measure of any solution lies in its real-world impact. Silent Onboarding has already made a significant difference for many of our clients. Banca Sella, for instance, has seen smarter onboarding management and reduced fraud losses. Cofidis achieved substantial reductions in onboarding times and a significant increase in synthetic identity detection rates.
Another client, Snaitech, has minimized the need for manual intervention in new account reviews by leveraging alternative data on users’ emails and phone numbers.
As losses caused by synthetic identity fraud continue to rise, financial institutions are shifting towards more layered and complex systems of digital fraud prevention.
Synthetic Identities, Real Solutions: Pioneering the Next Wave of Fraud Defense
As we look ahead, the fight against synthetic identity fraud will require continued innovation and collaboration across the industry. At Trustfull, we're committed to staying ahead of the curve, constantly refining our approach to meet emerging threats.
It is often said that fraudsters are like chameleons, constantly adapting to blend into the financial landscape. As providers in the anti-fraud space, our job isn't just to keep up – it's to stay one step ahead and spot their fraud attempts before they can hurt businesses. With Digital Risk Intelligence, we're not just beating fraudsters at their own game; we're completely rewriting the rules. Our solution acts as an invisible sentinel, using the very digital footprints that fraudsters leave behind to flag their synthetic identities.
Silent Onboarding is just the beginning. Our vision extends beyond initial sign-ups, aiming to ensure business safety and compliance across the entire spectrum of digital customer interactions. As synthetic identity fraud continues to evolve, so too must our defenses. By combining traditional verification methods with innovative, silent approaches, we can create a more robust defense against the ever-changing landscape of digital fraud.
