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Synthetic identity fraud to hit $5B in two years. Credit agency practices enabling crime

Synthetic identity fraud to hit $5B in two years. Credit agency practices enabling crime
 

Could U.S. synthetic fraud losses in 2024 equal the valuation of five unicorns? That is what one digital ID verifier predicts.

Socure says in a new report that synthetic digital identity fraudsters will reap $5 billion in 2024 – double the estimated loss this year. Much of the fraud is designed to hide things like bad credit histories or criminal records.

The $5 billion total builds on synthetic fraud activity occurring now.

The company says that today there are 124 million U.S. households with one member who has at least one bank account. It assumes anywhere from 1 percent to 3 percent of all demand deposit accounts in banks and fintechs are synthetic persona frauds. Socure chose 2 percent as a middle ground.

That means 2.48 million biometrically enabled fake accounts now, and on average, each account will steal $1,000 this year, for a total of $2.48 billion.

When criminals are using real ID documents or Social Security accounts, they are creating fictitious accounts that use real IDs as camouflage – choosing common names, demographics and consumer traits.

This leads Socure to predict the account most likely to be bogus is in the name of Michael Smith, a 31-year-old born in August and living in a single-family home in Houston.

“Battling this kind of fraud poses many challenges and some can be traced to modern credit reporting practices and how fraudsters exploit them,” says Johnny Ayers, CEO of Socure.

Ayers contends that synthetic biometric fraud can be eradicated “within the next three years and stop the damage that bad actors are committing against consumers and our financial system,” using better, more precise tools available now. Those tools, he says can even reduce the friction typically used to rebuff fraudulent account applications.

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