Fraudsters who take real elements from people, such as their Social Security number, name, or address., and piece them together to create a whole new person and use those fake identities to obtain loans or credit cards are causing issues for both first- and third-party collectors when they try to contact these people, Linda Straub Jones, Director of Collections Compliance for LexisNexis Risk Solutions, discusses in the video below.
Collection agents end up “spinning their wheels,” trying to find someone that does not exist, Straub Jones said.
This scheme, known as synthetic identity theft because a new identity is being created, is a growing problem for everyone in the financial services industry, including collection agencies, Straub Jones says.
Synthetic identity theft was the cause of more than $800 million in credit card losses in 2017, according to one report, up from $580 million in 2015. Synthetic identity theft is the cause of approximately 80% of all credit card losses, according to another report.