Artificial intelligence is fueling synthetic identity theft, one of the fastest-growing financial crimes in America. Unlike traditional identity theft where an individual impersonates another person to pay for goods and services without permission, synthetic identity theft combines real information with fake data to create a new identity that looks legitimate. The new information is used to open lines of credit, create fake businesses, apply for loans, file tax returns, and even apply for unemployment benefits.

Financial institutions are reporting synthetic identity theft as their top fraud concern and have implemented multi-layered verifications processes that must be followed before approving loans or new lines of credit. That verification process recently prevented a local business owner in Cornelius, North Carolina from being used to perpetrate a fraud against a bank in Florida.

In late September, the local business owner received a call from a banker in Florida who asked him if he had applied for a loan in their state. He replied, no. He was told that the application for the loan included his actual driver’s license, social security number, a fake business website that used his name and likeness, and a Florida address. The degree of legitimacy in the loan application was startling but luckily the savvy banker who received the application took the time to follow the verification protocol. She realized the person allegedly applying for a business loan at her bank owned a popular franchise business and resided in another state, and then she picked up the phone. 

Although synthetic identity theft is more damaging to financial institutions, you can reduce your exposure by protecting personal information, checking credit reports regularly, freezing your credit, and enabling two-factor authentication on digital accounts.