Socure Takes Public Stand to Root out 100,000 Synthetic Identities by Year’s End

In his recent State of the Union address, President Joe Biden was speaking Socure’s language. 

Regarding COVID-19 relief, the President stated that criminal identity fraud rings had managed to divert close to $100 billion into their own pockets, stealing from those who actually needed the support. Biden also called on the government and Congress to triple the number of anti-fraud strike forces to go after these criminals. He proposed doubling the statute of limitations on cyber crimes and cracking down on identity fraud by these criminal syndicates that are stealing billions of dollars from the American people. These developments are encouraging, because the federal government recognizes there is a problem and is doing something about it.

But it’s not all about crackdowns—we must work together to prevent fraud before it happens, too. 

Biden’s address shows that at the highest level, our leaders recognize that the status quo is no longer working. It also signifies that we desperately need to be making bigger investments in innovative approaches to identity verification and fraud prevention.

In this blog post, we’ll explain how synthetic fraud continues to wreak havoc across the U.S. financial system, and more importantly, how Socure will lead the charge in eradicating this growing threat. 

Synthetic identity fraud is on the rise, costing Americans billions of dollars

The U.S. Department of Justice has identified synthetic identity fraud as the fastest-growing type of financial crime. Since the COVID-19 pandemic, synthetic fraudsters are on the prowl, wreaking havoc by creating accounts using these fake identities and then using them to fraudulently collect relief checks or other payouts. 

The Pandemic Response Accountability Committee (PRAC) recently traced $5.4 billion in COVID-19 relief loans back to synthetic identities using fake Social Security numbers, tricking government agencies into disbursing funds to them between April 2020 and October 2022. That number will continue to rise and could cost close to $5 billion in 2024 alone, according to Socure’s The State of Synthetic Fraud report. 

Socure’s research found that synthetic identities are being used as money mules to fuel fraudulent money movement. Additionally, peer-to-peer payment (P2P) scams doubled from 2020 to 2021, and will likely double again, according to the report. Unfortunately, the American people are footing the bill. 

The recent SOTU confirmed that government regulators are taking note. In fact, the Consumer Financial Protection Bureau (CFPB) is looking to mandate that banks shoulder the majority of financial losses stemming from these scams, and some major traditional banks are signaling that they may self-regulate and take on some of the P2P losses, using this change as a competitive differentiator. Currently, consumers are most at risk for financial losses from payment scams using synthetic identities; regulations could shift a little more than $2 billion in potential losses to the banks themselves.

Socure is taking a public stand to stop synthetic fraud

Synthetic fraud behaviors have changed drastically following the pandemic, and are now attacking deposit accounts at higher rates than any other time in history. As a result of the subsequent uptick in synthetic identity fraud, Socure has taken a public stand to eliminate, track and report on the progress of reducing fraud in the U.S. financial system. And, we’re starting with our commitment of rooting out 100,000 synthetic identities in 2023. 

This is an eminently achievable goal for Socure and our customers who use Socure’s solutions today to stop fraud at account origination. Today’s target of 100,000 synthetic identity takedowns is just the beginning. Socure strongly believes working together with the financial services industry and the government, we can eradicate the problem of synthetic fraud completely by 2026 and stop the damage that bad actors are committing against consumers and the U.S. financial system.

Stopping synthetic identities at account origination

Identifying and eliminating money mule accounts from the US financial system will help reduce the amount of scams perpetrated by bad actors against consumers—since these mules will have fewer places to receive and send fraudulently earned dollars. But preventing synthetics from entering your ecosystem in the first place is another crucial piece of the puzzle.

Socure’s Sigma Synthetic Fraud solution is a purpose-built synthetic identity fraud detection solution that blocks harmful synthetic identities at account creation. The solution uses advanced machine learning (ML) techniques and expert human-in-the-loop analysis to mitigate rapidly evolving and complex synthetic patterns, resulting in the ability to deploy the right tools at the right time to hone customers’ decisioning strategy—whether the goal is to capture more synthetic fraud or create a lower-friction user experience.  

Socure can also identify synthetic identities that have been accepted and exist within an organization’s customer portfolio by conducting “scrubs” using our synthetic fraud models. These scrubs have been requested by some of our customers who recognize that they have synthetics actively engaged in their portfolios. These organizations want to efficiently identify and eliminate synthetics from their account systems before they can do more damage, and in advance of any changes to P2P loss responsibility shift.

Moving forward

Synthetic fraud will continue to plague the industry until the industry and U.S. government partner together to take a stand. Socure is up for the challenge. We will continue to produce bi-annual updates on the number of synthetic fraud accounts we identify and eliminate from the financial ecosystem as we edge closer to eliminating synthetic fraud altogether by 2026.

If you’re interested in eliminating the synthetic identities from your current customer portfolio, speak with an expert today.