Synthetic identity theft: Beware! Credit card users must know about this online fraud

Synthetic identity theft: After the IT revolution, various technologies are being evolved to contain online economic offence. Amid evolving new technologies, new age crimes are also evolving these days. Synthetic Identity theft is one such crime that is being used by the fraudsters while doing online purchase by credit card.

Speaking on the synthetic identity theft Ajay Kaushik, CEO at Panacea Infosec said, "In the Synthetic Identity Fraud, fraudsters develop new identities by mixing real and fake information. Generally, the real information being used by the crime executors are stolen. Fraudsters use this fake account for online purchase but they execute online fraud after building their healthy CIBIL or credit score by using that fake account for some time. The higher credit score allows the fraudster for a bigger windfall down the road. This new kind of sophisticated theft allows the criminal to steal money from creditors including credit card companies who extend credit based on the fake identity." He added that in this type of fraud, it's the bank that bleeds not the customer. In this bust-out fraud, a customer executes a credit card default and the bank finds it so late that they have no option but to put it in the NPA on most occasions.

Explaining how a fraudster uses this fake identity to execute credit card default cybercrime expert Amit Dubey said, "By synthetic Identity, fraudsters present the fake Identities similar to real customers with limited credit history applying for an account, therefore, risk detection systems normally unable to identify. Along with this in most cases, there is no clearly identifiable victim and often goes unnoticed and unreported right up until the fraudster makes the frauds. Normally banks identify synthetic identities very late because the criminal establishes a history of using the fraudulent account responsibly before it becomes delinquent to make it look like a real person experiencing financial problems and not a criminal. That’s why this fraud is called bust-out fraud."

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On how banks and lending institutions can contain this new age sophisticated bank fraud Ajay Kaushik said, "Many sophisticated technologies that help to detect other types of fraud are not useful in these types of fraud. Machine-learning techniques such as deep neural networks that find patterns associated with fraud are of little use because so few cases of synthetic ID fraud have been uncovered. To contain this kind of sophisticated online credit card fraud, detecting synthetic IDs using third-party data can be useful. Data of real identities scatter in many data systems either physically or digitally and these data trails can’t be fake. Deep data mining into the data trails, real identities left behind can also help financial institutions detect this sophisticated crime of the new millennium."