TransUnion finds synthetic identities have reached a record high in the financial sector

• According to a TransUnion report, synthetic identity fraud in U.S. account openings rose by 18% in the first half of 2024 compared with the same period the previous year.
• Fraud networks and the types of fraud they commit are constantly evolving.
• Consumers with little awareness of digital risk are the most vulnerable to fraudsters.

Santo Domingo, 26 February 2025. Synthetic identities are one of the fastest-growing and hardest-to-detect forms of fraud in the financial sector. This type of crime has been on the rise, especially in sectors such as banking, credit and e-commerce, and synthetic identities are often used to obtain illegal benefits, such as lines of credit and loans, or to commit other financial crimes.  

Synthetic identities combine attributes from the real identities of different people to fabricate a new profile used to commit illegitimate acts and make financial gains.  

This has led to an increase in fraud: according to TransUnion’s H1 2024 Omnichannel Fraud Report, the percentage of synthetic identities among accounts opened in the United States for auto loans, bank credit cards, retail credit cards and unsecured personal loans reached a record high at the end of the first half of 2024 (1 January to 30 June), up 18% compared with the first half of 2023. That left lenders exposed to potential losses of USD 3.2 billion at the end of the first half of 2024, also a record high. 

TransUnion explains that the various forms of this scam involve fraudsters using social engineering (smishing, vishing and phishing) to obtain real consumer information, and most victims have no way of knowing their personal data is being stolen. This type of theft is hard to detect because creating these identities can take some time.   

“Smishing” is a type of cyberattack that uses text messages (SMS) to trick people into revealing confidential information, such as bank details or login credentials. “Vishing” is a fraud technique that uses conventional phone calls to manipulate people and obtain information that can be used to carry out the scam. “Phishing” is a practice in which attackers pose as a trusted person or company to deceive the victim through a website that pretends to be legitimate, with the aim of gaining the consumer’s trust so that they take dangerous actions, such as clicking on malicious links or downloading harmful files.  

Diana Martínez, Director of Fraud Solutions for TransUnion in Latin America, says that “the people most vulnerable to these fraudsters are consumers who are unfamiliar with the digital world. For example, those who don’t think twice before opening text messages or emails, in other words, those with no education in digital risk.”  

“On the other hand, once the synthetic identity has been created, there are the companies that can fall victim, such as financial institutions, insurers and telecommunications companies, among others that do not have a robust authentication and identity-proofing process based on personal and digital identity information,” says Diana Martínez.  

Preventive strategies  

TransUnion considers it important for institutions to define omnichannel strategies that take into account new trends and the constant evolution of fraud in the  digital world. It therefore recommends using emerging technologies such as artificial intelligence and inherence as authentication mechanisms, consulting consortia and verification sources to reinforce identity-proofing and authentication mechanisms, and defining and reviewing authentication processes for existing customers and users of app and web transaction portals, so that their personal and private information is protected against possible account takeover.  

Institutions also need to strengthen, as part of their financial education and fraud strategy, constant communication about the new digital scam trends their consumers are exposed to.  

Solutions  

Through its TruValidate platform, TransUnion offers institutions in different sectors identity management and fraud detection solutions that help mitigate the risk of synthetic identity fraud by generating a range of early alerts. It also gives institutions capabilities that create the right amount of friction in the user experience, improving conversion rates and reducing drop-off rates in their digital channels.  

About TransUnion  

TransUnion is a global information and insights company with more than 13,000 associates operating in more than 30 countries, including the Dominican Republic. We make trust possible by ensuring that each person is reliably represented in the marketplace. We do this by providing a multidimensional view of consumers, managed with care.  

Through our acquisitions and technology investments, we have developed innovative solutions in areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good®, creating economic opportunities, great experiences and personal empowerment for millions of people around the world.