Toolkit Module 6: Identifying Synthetics

Identifying a Synthetic at the Account Opening

One of the best mitigation strategies to help avoid losses associated with synthetic identities is to identify the synthetic before the relationship is opened. Identity proofing is the first line of defense during the account opening process. After the customer relationship has been established, it becomes more challenging to detect a synthetic identity.

Learn more about identifying synthetics at the account opening in the video below.

Identifying Existing Synthetics Within a Portfolio

Synthetics often lurk within portfolios to build payment histories and increase their available credit lines before defaulting. These accounts appear to be owned by legitimate customers, frequently conducting small-dollar purchases and payments. In turn, there may not be any indications of suspicious activity before the fraudster maxes out the line of credit with no intent to repay. Through routine monitoring of accounts using automated and/or manual processes, financial institutions can help avoid losses or a reputational impact from fraudulent activity related to synthetic identities.

Learn more about identifying synthetics within a portfolio in the video below.

Identifying Existing Synthetics Post-Loss

Some fraudulent identities may evade fraud controls for months or years without detection. When a loss occurs, the obvious question is whether it warrants additional investigation or would be appropriately classified as a credit loss. When synthetic accounts go delinquent, there is no actual customer to find for collection. Account behaviors and data analysis can help identify related accounts for review, as accounts with common data elements could indicate fraudulent activity.

Learn more about identifying synthetics during post-loss analyses in the video below.

Downloadable Resources

Explore these resources for additional information on identifying synthetics at different stages in the account relationship.

Document TitleFormatReading Time
Identifying a Synthetic at Account Opening (PDF)Document4 minutes
Identifying Existing Synthetics Within a Portfolio (PDF)Document7 minutes
Identifying Existing Synthetics Post-Loss (PDF)Document6 minutes

The synthetic identity fraud mitigation toolkit was developed by the Federal Reserve to help educate the industry about synthetic identity fraud and outline potential ways to help detect and mitigate this fraud type. Insights for this toolkit were provided through interviews with industry experts, publicly available research, and team member expertise. This toolkit 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. While use of this toolkit throughout the industry is encouraged, utilization of the toolkit is voluntary at the discretion of each individual entity. Absent written consent, this toolkit may not be used in a manner that suggests the Federal Reserve endorses a third-party product or service.