Synthetic identity
A person who never existed, assembled from real data (a Social Security number, a birth date) and invented details, whose fraud can go unnoticed for a long time because there is no victim to report it.
Synthetic identity fraud fabricates, from borrowed real identifiers and invented details, a person who never existed, with a coherent face, voice and documents, where impersonation borrows a real one. The worst of it is that there is no victim. No real person sees the fraud, so nobody reports it, and losses grow quietly, the Federal Reserve cited 6 billion dollars of losses for American lenders in 2016, a fifth of that year's credit losses, and its more recent work speaks of 20 billion a year for American payments, a figure practitioners consider understated because the fraud is booked as bad debt. For insurers it is a special case, because pooling assumes there is a real, identifiable and accountable person behind every policy. A synthetic identity puts ghost policyholders into the portfolio, with nothing tying them to the real world.
Textbook case: someone who does not exist can take out a policy, file a claim and collect an indemnity, and remain pure fiction throughout.
- Federal Reserve Bank of Boston, "A victimless crime? Hardly", August 2022; Federal Reserve industry definition (FedPayments Improvement, FraudClassifier model)
- Federal Reserve, 2019 report on synthetic identity fraud in the U.S. payment system (citing Auriemma Group); FedPayments Improvement, note on the miscategorization of synthetic identity fraud
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