As announced this fall, the Federal Reserve convened a focus group of 12 fraud experts to create an industry-recommended definition of synthetic identity fraud. This initiative follows publication of the Federal Reserve’s white paper series on synthetic identity fraud, which includes insights on how differing definitions of synthetic identity fraud make it difficult to quantify the impact of this type of fraud in the United States.
The focus group met in October and November to begin collaboration on creating a synthetic identity fraud definition and suggested approaches for voluntary industry adoption. Additional focus group discussions are planned for the first part of next year.
“The goal of our focus group is to develop a comprehensive, yet clear definition that can help the industry distinguish synthetic identity fraud from other fraud types,” said Mike Timoney, vice president for secure payments with the Federal Reserve Bank of Boston. “We are on track to publish a recommended definition in early 2021.”
In its meetings to date, the focus group reviewed currently used definitions of synthetic identity fraud, looking for common elements that could be incorporated into the definition, as well as missing or potentially conflicting elements. Members strongly agreed their definition should focus on the identity itself, rather than a given outcome of using a synthetic identity. The group also discussed the benefits of including supplemental information with the definition, such as examples of how synthetic identities are used.
“Ideally, the industry will be able to use this definition to differentiate synthetic identity fraud from conventional identity fraud or a credit loss,” said Timoney. “This type of fraud has flown under the radar for years at many financial institutions due to misclassifications or simply a lack of understanding. We anticipate a more specific definition will help improve measurement, reporting and detection of synthetic identity fraud within organizations and across the payments industry.”
To stay up to date on the Federal Reserve’s payments improvement efforts, including this initiative, join our FedPayments Improvement Community and select “Payment Identity Management” at registration.
Any definition of synthetic identity fraud to be proposed by the focus group or accepted by the Federal Reserve is not intended to result in any regulatory or reporting requirements, imply any liabilities for fraud loss, or confer any legal status, legal definitions, or legal rights or responsibilities.