Synthetic ID Fraud. Pervasive, Misunderstood, and Unknown. Monday, April 20th 10:15-11:15 AM

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1 Synthetic ID Fraud Pervasive, Misunderstood, and Unknown Monday, April 20th 10:15-11:15 AM

2 Bob Cofod Director SightSpan

3 Barbara Simcox Director of Investigations and Training Turnkey Risk Solutions

4 Steven D Alfonso Senior Financial Crimes Intelligence Specialist IBM Red Cell

5 Fake Identities Out of Thin Air Estimated cost billions per year across North America 10 times number of cases over past 5 years Children s IDs are 51 times more likely used than adults May remain undetected for years Used to build low impact credit profile Variable fraud uses

6 Synthetic Identity Fraud: Pervasive, Misunderstood, and Unknown Have you (or your organization) encountered Synthetic Identity Fraud?

7 Synthetic Identity Fraud: Pervasive, Misunderstood, and Unknown Does your organization differentiate synthetic identity theft from identity theft?

8 Synthetic Identity Fraud: Pervasive, Misunderstood, and Unknown Do you have the ability to quantify the size of synthetic identity fraud risk for your organization?

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10 Synthetic Identity Fraud Defined Synthetic Identity fraud (SIF) is a fraud that involves the creation of a fictitious identity. New identities are manufactured with a combination of real and fabricated information. New Name Valid & Issued SSN Synthetic Identity Different Address

11 Synthetic Identity Uses Synthetic identities are created for various reasons but most often they are sought after for the following: Criminal Activity Organized Fraud for Living Undocumented Citizens Conceal Bad Debt Credit Repair Websites Confidential and Proprietary

12 Anatomy of the Scheme Process flow for creating a Synthetic Identity Screen the SSN Commit the Fraud Manage the Credit File Create an Identity Establish a Credit File

13 Affected Lines of Business Synthetic identities can be established and used in many different lines of business Government Confidential and Proprietary

14 Synthetic Fraud Challenges Lack of General Awareness Lack of Universal Definitions & Reporting Privacy Concerns Credit vs. Fraud Inadequate Verification Tools Organizational Silos Confidential and Proprietary

15 Synthetic ID Ring stole over $200MM Scope 7,000 Synthetic Identities 25,000 Credit Cards 169 Bank Accounts* 1,800 Mailing Addresses 80 Fraudulent Merchants 28 States AL, AZ, CA, CT, FL, GA, ID, IL, IN, IA, KS, KY, ME, MD, MI, MS, MO, NJ, NY, NC, OH, PA, TX, UT, VT, VA, WA, and WI 8 Countries The United States, Canada, Romania, Pakistan, India, United Arab Emirates, China, and Japan Confidential and Proprietary

16 Data Breaches Source: Not all data breaches are created equal Recent Medical insurer breaches provide more opportunity to create synthetic IDs Data sold on Deep Web market places (TOR, i2p) o o Raw data New Synthetic IDs Confidential and Proprietary

17 Why is SIF Important? Its EFFECTS cut across multiple industries Confidential and Proprietary

18 Vulnerable Populations No one is immune Vulnerable Populations Confidential and Proprietary

19 Synthetic Identity Fraud Implications Financial losses $billions across North America Growing globally No differentiation between ID theft and SIF Traditional ID theft services cannot prevent or detect SIF Organizational blindness Undermines consumer protection laws Enables criminal activity Facilitates money laundering activity Homeland security implications Bypass travel restrictions Fund nefarious activities Confidential and Proprietary

20 Synthetic Identity Fraud: Pervasive, Misunderstood, and Unknown DISCUSSION What kinds of measures can be taken at enrollment to aid in detecting SIF?

21 Synthetic Identity Fraud: Pervasive, Misunderstood, and Unknown DISCUSSION Is there supplemental analysis of new enrollees (similar to followon CIP) that could mitigate the risk?

22 Synthetic Identity Fraud: Pervasive, Misunderstood, and Unknown DISCUSSION Are there methods for transaction analysis that should be considered to aid in detection?

23 Synthetic Identity Fraud: Pervasive, Misunderstood, and Unknown DISCUSSION Training is often a valuable deterrent to fraud what kind of training should be considered to mitigate SIF?

24 Synthetic Identity Fraud: Pervasive, Misunderstood, and Unknown WRAP UP Problem continues for The Community Cooperative Solution is essential! Front Line Investigators/Specialists are the key to the critical knowledge MORE EXPOSURE NEEDED: Prevention Detection Analysis Prosecution

25 Synthetic Identity Fraud: Pervasive, Misunderstood, and Unknown Resources White Paper Synthetic Identity Fraud: Can I borrow your SSN? Who else might be using your Social Security number and why?- Co-written by Turnkey Risk Solutions and IBM Red Cell Team Suspected terrorist links to synthetic ID fraud are being 'ignored' - CBC News How 'synthetic' identity fraud costs Canada $1B a year - CBC News *Excellent 14 minute in depth news story. 18 charged in $200M credit card fraud scam that created 7,000 new identities - nj.com More defendants plead guilty in massive, $200M credit card fraud - nj.com The Borrower Who Never Was - The Wall Street Journal

26 Thanks for Attending! Please Join Us in the Exhibition Hall for a Networking Break