Criminals are now creating non-existent identities to conduct fraud, survey finds

Criminals are now creating non-existent identities to conduct fraud, survey finds

Michelle Zhu
07/02/18, 03:44 pm

SINGAPORE (Feb 7): While prevention technologies have managed to deter identity fraud activities such as card skimming, criminals are now beginning to steal identities or even constructing entirely new ones to obtain real credit cards from banks.

This is according to Dan McConaghy, president of FICO in Asia Pacific, a predictive analytics and data science firm whose recent survey – conducted among 37 financial institution executives at the annual FICO Asia Pacific Fraud Forum held in Bangkok, Thailand, in Oct 2017 – found that six in 10 of the region’s banks are experiencing application fraud using synthetic identities.

A synthetic identity is constructed from blending of elements and data from multiple individuals to create a new persona, which is then used by scammers to apply for accounts and make the uncovering of fraudulent transactions more complicated.

The survey also found that 44% of bank executives surveyed believe that social platforms and mobile apps are the most likely to suffer a data breach. FICO suggests that stolen personal information from such platforms can, in turn, be used in fraudulent activities involving synthetic identities.

It is therefore unsurprising to the firm that the survey also showed how four in ten banks have made dealing with application fraud a key priority in 2018.

“The availability of personal information online via social media platforms and mobile apps has made it easier for culprits to mix fake and real personal information. Not only are they stealing data from profile information that is open on the web, they are also breaching poorly-defended mobile apps that collect personal information,” comments McConaghy on this finding.

In McConaghy’s view, fraud analytics is the only way to block more fraud from occurring among the banks as it can predict new patterns.

One such technique is identifying a common point of purchase for compromised cards, which is achieved by using analytics to link transactions that were determined to be fraudulent, and subsequently identify the source of leaked card information. FICO says around half the banks surveyed currently have such a solution in place, but expects this trend to grow next year.

Based on its study’s results, the firm also notes the lack of budget as a key obstacle to tackling fraud, followed by the fraud department having to deal with too many false positives. 

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