What is Synthetic Identity Fraud? 

Synthetic identity fraud is the creation of a fraudulent identity using some real and legitimate data, which is then combined with faked data – in essence, a fake identity that is enriched with real data to make it appear more legitimate. 

There is nothing entirely new about this approach to identity fraud. Instead, it represents the increasing complexity of identity fraud operations and the cunning of the fraudsters who commit these schemes. 

To overcome these increasingly complex threats, businesses must invest in high-quality and advanced KYC, identity verification and due diligence processes use the latest technologies to accurately verify identities. To find out more, speak to our team here.  

How is Synthetic Identity Fraud Committed? 

Oftentimes, the roadmap of a synthetic identity fraud scheme will align with the following steps: 

• Using fake and real personal information/data to create a synthetic identity 
• Using this profile to apply for lines of credit and repaying them to build a trusted repayment history 
• Boosting the credit score by making consistent repayments
• Once the available loans are large enough, the fraudsters will take out the largest pissible loan and disappear.  

The gradual nature of these sorts of identity fraud schemes make it difficult to detect and stop them. 

Who is Most Affected? 

Fake identities that are created using synthetic identity fraud are often used to commit the same types of financial crime that has historically been an issue, which includes: 

• Taking out lines of credit 
• Purchase items with stolen bank cards 
• Launder money 
• Commit social engineering schemes to steal money 

Credit providers are the worst affected by these schemes. 80% of credit card fraud losses and nearly 20% of chargebacks incurred by merchants, as per research conducted by the credit bureau Experian.

Although these issues primarily affect the financial services industry but has the potential to affect nearly any industry that relies on authentic identities to manage and process funds. 

These forms of fraud have significant negative impacts on businesses and consumers alike – Forbes estimates that identity fraud could defraud businesses approximately 5 billion USD in 2024. 

Identity Verification and Information Validation Services for South Africa 

By providing world-class identity verification systems, we give businesses the tools they need to effectively mitigate risk and place trust in their transactions. 

As South Africa’s leading provider of KYC, due diligence and remote-onboarding solutions, ThisIsMe is proud to be at the forefront of a trust-based and privacy-compliant digital world. To experience how we can help your business ensure regulatory compliance, mitigate risk and secure its transactions, contact our team here.