“A shared understanding of what constitutes synthetic identity fraud is expected to improve its detection, measurement and mitigation in the payments industry,” Jim Cunha, senior vice president, Federal Reserve Bank of Boston, said in a press release on Tuesday (April 6).
“Consistent use of this definition within and across organizations can enable us to discuss, identify and classify synthetic identity fraud in a similar manner,” he added.
The definition of SIF came from a focus group composed of fraud experts who reached a consensus. The panel was convened to streamline the numerous definitions of SIF into one that is official and makes sense. The variety of definitions used throughout the industry made it hard to detect and conquer this type of cyber fraud, according to the Fed.
SIF is now officially defined as “the use of a combination of personally identifiable information (PII) to fabricate a person or entity in order to commit a dishonest act for personal or financial gain.”
Industry experts included Lee Cookman, TransUnion; Jeffrey Feinstein, LexisNexis Risk Solutions; Toni Gillich, U.S. Government Accountability Office (U.S. GAO); Claire Le Gal, MasterCard; Jack Lynch, Payment Systems for Credit Unions (PSCU) and others.
Applying this definition is voluntary. However, the usage will make for better data analysis about SIF, the Fed said.
SIF affects 60 percent of businesses, costing them more than $6 billion a year. In an interview with PYMNTS, Jose Caldera, chief product officer at Acuant, said that fraud can’t be beaten with a static approach. A layered approach includes having the right tech during the onboarding process and using that tech to monitor activities.
The Federal Reserve issued a report in July 2020 about how best to approach the increasing problem of SIF. The Federal Reserve reported that experts suggest a multilayered strategy that uses a cross section of manual and digital information analysis.
Selected by EFXA