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UK home to 3m 'Frankenstein identities, posing multi-billion pound threat

UK home to 3m 'Frankenstein identities, posing multi-billion pound threat

The UK is home to nearly three million "Frankenstein" identities stitched together by fraudsters out of real and made up personal details, according to researchers who warn of a potential multi-billion pound hit to the economy.

LexisNexis Risk Solutions looked at over 72 million consumer profiles and found 2.8 million showing several signs of 'Frankenstein cloning' to create 'new' synthetic identities to spoof credit checks and commit high-value fraud against banks and credit providers.

In the US, where synthetic fraud is already a major issue, businesses report an average $15,000 loss to each confirmed synthetic fraud case. Translated to the UK, LexisNexis estimates the problem could cost the economy around £4.2 billion by 2027, unless firms start properly screening for the threat.

The study found strong evidence of scammers up and down the country using 'synthetic farms' in rural locations and 'synthetic factories' in urban areas to build up the credit scores of new synthetic identities on an industrial scale, in readiness for fraud attacks.

In one example, rental cottages based on a farm in Chichester appeared to have 439 highly suspect identities 'living' there over the past seven years, only 22 of which showed any evidence of being real people.

The identities were making hundreds of applications for credit, such as short-term and payday loans and some were also linked to a similar farm hundreds of miles away near Dundee, Scotland.

Noreen Altaf, identity fraud specialist, LexisNexis, says: "At first, a synthetic ID has little value to a fraudster, as it has no credit history, so they need to play the long game. Scammers nurture each false identity by building what appears to be a real credit profile over time, making the synthetic ID seem like a trustworthy customer - because of this the fraud threat is effectively invisible to firms' existing fraud defences, until it's too late.

"Once a fraudster thinks the synthetic ID has enough plausibility, they'll aim to max out available credit lines."

Comments: (2)

David Abbott
David Abbott - FIS - London 13 June, 2024, 11:211 like 1 like

It will be new and emerging lenders  who are the primary targets for these criminals.  Existing lenders offering new products will also be targeted as will more established products but probably in this order based on my experience.   I believe the USA will be the happiest hunting ground for these avatars, and it will take the large data model owners to sniff them out.  Interestingly, the owners (private or corporate) of these rental properties may be able to become part of the solution if they are able to spot postal evidence of false claims of residency at their owned rental locations. 

A Finextra member
A Finextra member 13 June, 2024, 11:25Be the first to give this comment the thumbs up 0 likes

We should call these accounts 'Shelley's'