Synthetic fraud most directly impacts Financial Institutions and card issuers, because these entities usually cover fraudulent purchases as chargebacks. However, there’s a growing pattern of cases (especially with high ticket purchases) in which merchants are required to pay under evolving Merchant Responsibility Rules. It seems logical that the more this kind of fraud grows, the more aggressive these rule changes will be.
This corresponds to criminals doubling down on the use of synthetic identity strategies as they anticipate current world conditions, creating more cracks to slip through. According to Association of Certified Fraud Examiners (ACFE) President Bruce Dorris, “We can expect to see an explosion of fraud in the coming years, and organizations need to brace themselves.”
As higher online order volumes collide with fraud tactics that often go undetected by most fraud models, one obvious way to ‘brace’ is for merchants to adjust fraud detection rules to more specifically target synthetic IDs. This would leverage more manual review in certain cases, and we’ve already seen this taking root. Manual review is a prudent and responsible way to stay ahead of the 2020 Fraud Curve.
We all know manual fraud review is a function that’s very high on everyone’s cost control list; but now more than ever, Fraud Analysts – armed with the right tools – are a critical part of finding the right balance between driving revenue and mitigating risk.
For this Pipl SEARCH enables users to quickly verify if identity information provided in an online purchase matches a statistically valid profile. For more detail, we’ve developed a list of best practices which focuses on how to effectively segment good and fake identities.
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