Synthetic Identity Fraud. Kathy Druckenmiller, CFCI, CCCI, CIRM, ACT Specialist May 2017

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1 Synthetic Identity Fraud Kathy Druckenmiller, CFCI, CCCI, CIRM, ACT Specialist May 2017

2 Synthetic Identity/Ghosting

3 Identity Theft vs Identity Fraud Identity Theft Legitimate Identity is stolen Identity Fraud Fictitious Identity is created

4 Identity Theft Controls

5 Synthetic Identity/Identity Theft Synthetic identity theft now accounts for nearly 85% of the more than 16 million ID thefts in the U.S. each year finds the Federal Trade Commission Federal Trade Commission, "The Changing Face of Identity Theft"

6 Definition syn thet ic b : devised, arranged, or fabricated for special situations to imitate or replace usual realities 6

7 Credit Fraud Synthetic Identities Uses Establish valid residency (Immigrants) Health Insurance Fraud Credit Repair Organized Crime (Terrorism?) 7

8 How does it happen? Create a synthetic identity using combination of real and fabricated information Purchase a Credit Privacy Number (CPN) and assign it to a fictitious identity Create a credit file and link a synthetic identity to a legitimate account holders account as an authorized user. 8

9 Lifecycle of Synthetic ID for Fraud Obtain CPN or SSN Payment Default Establish Identity Obtain Credit Pollination

10 CPN Advertised by Credit Repair sites as: Credit Privacy Number Credit Profile Number Nine digit identification number that can be used instead of a Social Security Number in SOME INSTANCES. 10

11 CPN Advertisements CPN Number this ad? Trusted top quality CPN provider No risk! Money back guarantee. Secondary Credit Number this ad? Secondary Credit Number, SCN, SCN number, New credit file $25000 CPN Loan Funding this ad? Loan Ready CPN Numbers FBI approved You Can Use CPN in Lieu of Your SSN 11

12 Websites

13 Websites

14 Legal?

15 SECTION 7 Privacy Act of 1974 (a) (1) It shall be unlawful for any Federal, state, or local government agency to deny to any individual any right, benefit, or privilege provided by law because of such individual's refusal to disclose his social security account number. (b) Any Federal, State, or local government agency which requests an individual to disclose his social security account number shall inform that individual whether that disclosure is mandatory or voluntary, by what statutory or other authority such number is solicited, and what uses will be made of it.

16 Websites

17 CPNs? What is sold as a CPN in usually a valid Social Security Number. 17

18 CPNs Where do they really come from? Elderly Homeless Incarcerated 18

19 Synthetic Identity Minors with no established credit 19

20 Social Security Numbers How do they get the Social Security Numbers?

21 Data Breaches 106 Million records 21

22 Creating the Synthetic Identity Synthetic Identity Creation Create an identity to pair with the CPN and submit application to Credit Bureau 22

23 Creating the Synthetic Identity Synthetic Identity Creation Header information; Report for: John Q. Public, Since 08/01/2014, Social Security Number: , DOB 02/15/1952 John is 63 years old and only established a credit bureau in

24 Websites

25 Tradelines Also referred to as a Pollinator Account

26 Tradelines 26

27 Tradelines Combo Packages 27

28 Timeline for Credit Reporting 28

29 Pollination Creating the pollination of the identity/credit file Header information; Report for: John Q. Public, Since 08/01/2014, Social Security Number: , DOB 02/15/1952 John is 63 years old and only established a credit bureau in

30 Pollination Synthetic Identity Creation Oldest trade line; 30

31 Websites

32 Completed Creation Synthetic Identity Creation Oldest trade line; Check recent trade lines; 32

33 Challenges for Banks Why add Authorized users? 33

34 Challenges for Banks The Equal Credit Opportunity Act Compliance with Regulation B The Federal Reserve s Regulation B, which implements the 1974 Equal Credit Opportunity Act, requires that information on spousal authorized user accounts be reported to the credit bureaus and considered when lenders evaluate credit history. 34

35 Challenges for Law Enforcement Who are the victims? No person with this combination of identifiers exists 35

36 Who are the Victims? Most often Children 36

37 Victims 37

38 Who are the Victims? 38

39 Law Enforcement 39

40 Mitigation Synthetic Identity Training and Awareness Employees Law Enforcement Freeze all Minor s credit files until 18 years old Review policy of authorized users on credit accounts 40

41 Questions