Financial Institutions and Credit Card Companies Lost $4.8 Billion to Synthetic Identity Theft
According to a March 10, 2023 Help Net Security article titled Synthetic identity fraud prevention calls for a new approach to identity verification, “US financial institutions and the credit card sector lost an estimated $4.88 billion to synthetic identities through falsified deposit accounts and unsecured credit cards.”
In addition, the article went on to say, “increasingly sophisticated crime rings are using these techniques to not only target financial institutions, but also government agencies and enterprises as diverse as telecom firms, online gaming businesses and property management companies.”
While synthetic identity fraud is not new – as it has been around for 20 years – it caught my attention when I wrote an August 2014 article for the Arizona Republic titled Synthetic identity fraud emerges as a growing threat and another article in April 2021 titled Synthetic Identity Theft and Fraud to Get Worse in 2021.
For those consumers who have not been paying attention to identity theft and fraud trends, synthetic identity theft typically includes a combination of fake and real credentials using names, Social Security numbers, driver's licenses, and employee identification numbers to create new ‘synthetic’ or fake identities.
Based on the above, I have encouraged both consumers and organizations for many years to increase their knowledge and awareness of their digital risk. Just last week, a TransUnion report found digital fraud attempts spiked 80% globally from pre-pandemic levels while “digital fraud attempts in the U.S. increased 122% amidst growing digital transactions and synthetic fraud balances reaching record levels.”
The TransUnion report also suggests that “as consumers and organizations increase their digital transactions, the overall risk to individuals and organizations is even greater than it was pre-pandemic.”
The reality is that we are at risk every day when consumers and small businesses participate in the digital world. Examples of digital risk include a phishing attack; a hacking attack; or when your personal privacy or data privacy is exposed; or when your cloud computing or cloud storage vendor is hacked.
And to be clear – digital services such as the internet, website marketing, Apple and Google apps, and more, make it possible for small business owners to deliver more new products and services. These same digital services also create more satisfying customer experiences.
However, with these great, new digital services comes risk – or should I say digital risk – which means unwanted and often unexpected outcomes that stem from digital business processes and digital consumer services.
So what can be done? Cybersecurity experts are working on new technologies so that financial institutions and credit card companies can know that their customers are really who they say they are.
In the meantime, consumers and small businesses can help manage their digital risk by:
Using stronger passwords and passphrases
Implementing two-factor (multi factor) authentication
Signing up for a VPN service
Regularly updating your antivirus software
Signing up for credit bureau and dark web monitoring
Lastly, three of the most common technology risks to be aware of are phishing (fraudulent emails), vishing (fraudulent phone calls and voicemail messages) and smishing (fraudulent text messages).