US banks incurred $20 billion in losses due to synthetic identity fraud in 2020, according to new data from the Federal Reserve.
To aid banks in addressing this issue, the Fed has launched a Synthetic Identity Fraud Mitigation Toolkit, offering an online repository of insights and resources for financial institutions, consumers, and businesses.
“Synthetic identity fraud, where fraudsters create an identity using a combination of real and/or fictitious information, continues to grow,” stated Jim Cunha, executive vice president of the Federal Reserve Bank of Boston. “Following years of research and collaboration with fraud experts, the Fed is taking the next step to support the payments industry in its battle against synthetic identity fraud by developing this toolkit.”
The initial version of the toolkit features downloadable resources aimed at increasing awareness of this type of fraud and equipping banks with tools to identify synthetic identities.
The Fed anticipates a second release later this year, which will enhance the toolkit with advanced strategies for validating identities and detecting suspected synthetic identity fraud.