Synthetic Credit Fraud Is Now Causing Big Problems For Credit Card Companies

Over the past couple of years, Credit card companies have noticed a concerning trend. Identity theft is on the rise, but now, a single fraudster can cause significant issues for some of the largest credit companies. How? By making hundreds to thousands of fake credit card accounts.

Fraudsters do this by first finding unassigned Social Security on the Deep Web. The average price of one of these unassigned Social Security Numbers? A single US Dollar. Fake Social Security accounts prove to be a challenge for Credit Card Companies to spot. It never used to be like this, The pioneers of SSN fabrication used to base fake numbers off of real peoples SSNs. Companies were able to catch onto this trend. But now, advanced computing allows these forgers to create convincing SSNs by using randomly generated numbers.

The next step for fraudsters is to open a Credit File. Any time a request is made to open a credit account, the a credit card company will create a credit file, even if the request gets rejected. Credit Card companies will reject a request if the applicants credit for several reason: poor credit score, or in more relevant cases, red flags that may indicate stolen or forged information. As these tactics for identifying red flags become more advanced, so have the tactics of fraudsters to avoid detection.

Once a Credit File is approved, fraudsters use fake names and other information to open credit card accounts. These fraudsters create hundreds of accounts, then rack up hundred of thousands of dollars in debt, which never ends up getting paid. This has been crippling for these companies. In 2016, synthetic ID fraud cost credit card companies a total of 6 billion dollars. Investigations into these fake accounts yield little information. Only by tracking down the IP addresses in where the fake accounts are created, can investigators track down these criminals. Synthetic credit card fraud is not a new tactic, but it is a growing one that is causing huge issues for companies.

https://www.creditcards.com/credit-card-news/fraudsters-creating-synthetic-identities-from-info-on-web.php

https://archives.fbi.gov/archives/newark/press-releases/2013/eighteen-people-charged-in-international-200-million-credit-card-fraud-scam

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