Identity Fraud Types We Bet You Never Heard Of

Stephen Hyduchak
Nov 5 · 5 min read

A few weeks ago, we wrote about synthetic identity fraud and many did not even know this was a form and vulnerability of our personal information. But, there is more; identity fraud refers to exploitation of someone else’s identity for financial gain. With digital currencies and more advanced forms of payments, the bad-actors are finding new ways to commit their fraud.

According to Javelin Strategy & Research, in 2018 there were over 14 million victims of ID fraud, costing consumers nearly $15 billion in losses. Despite the widespread adoption of anti-fraud practices, bad-actors are finding various ways to complete their fraud. Let’s go over them.

Synthetic Identity Fraud

Synthetic identity fraud is just how it sounds; the bad guy/gal takes real data and mixes it with synthetic data to create the identity.

A good example of this is taking a real driver license number along with a fake address and real date-of-birth. Using this mixed bag of information, the fraudster can now fake an identity to open new driver’s licenses, passports and credit cards.

This fraud isn’t cheap either; Equifax says, “synthetic ID fraud accounts for 80% of all credit card fraud losses, and nearly one-fifth of credit card charge-offs.” Another study found that synthetic ID fraud is responsible for 20 percent of credit losses, with an average charge-off of $15,000. It’s also one of the fastest growing forms of identity theft.

The worst part is that this type of fraud is affecting our youth. The fraudsters like to target children’s SSNs. This is due to lack of oversight on the credit file as the child is not actively monitoring and thus, make it a prime target.

Patient Identity Fraud

Healthcare is personal and an always hot topic in the political world. Regardless of your feelings on the healthcare system in your country, patient ID fraud has become a problem. The industry is fighting back with regulatory requirements that govern ID verification and due diligence, these are rules like HIPAA. Those rules state that only the medical information can be shared with the individual or those they have given written consent to share with.

According to one U.S. study, in 2017 there were over 300 medical/healthcare data breaches, potentially exposing 171 million personal medical records and costing the average victim $13,500.

Where there is humans, there is error. Most healthcare providers do NOT require a social security number, though their forms will ask. Making sure that customers only share their personally identifiable information (PII) when absolutely necessary can reduce the risk of databases that the information appears on.

Gaming Fraud

A new market is emerging and at fast rates, thanks to the United States Supreme Court. Their recent decision now allows states to make their own gaming rules and this has caused a massive expansion with estimates of over $170 billion global market.

With new growth like that, the bad-actors start to pay more attention. A study from Jean-Loup Richet found that fraudsters liked popular games like Fortnite, World of Warcraft and League of Legends. The in-game purchases and massive demand makes these digital credits very valuable.

The fraudsters have a coordinated and organized approach to their gaming fraud:

  1. They always use prepaid or stolen gift cards to make their purchases (v-bucks, etc).

Ghost Fraud

The timing of Halloween is just a coincidence to this article, but Ghost Fraud is certainly creepy. This is perhaps the most disturbing identity fraud. Simply, it is when a criminal uses a deceased person’s identity to obtain credit cards, loans and make purchases. Even worse, is that this type of ID theft is committed by someone (family, friends) who knows the deceased person, allowing them easier access to the necessary documentation needed to pull off the crime.

We all may be thinking that banks and credit agencies should know that a person has been deceased with a lot of the electronic notification systems that exist today, but this isn’t always the case. The system has a few drawbacks.

A good example is that John and Jane Smith are married and share a credit card, John applied through his SSN for the credit card and makes Jane an authorized user. After the passing of John, Jane continues to use the card and makes payment in normal frequency. Technically, Jane should have reported to the bank that John had passed and then they can mark his SSN as deceased. But, she did not know to do that and continues using the card. In that example, this gives the fraudster months or years to use that identity.

Light at the End of the Tunnel

It is not all doom and gloom here, there are some tools to take power back and actively monitor your credit, while institutions adapt new and better identity verification services like Aver.

  1. Credit Freeze — most U.S. states now offer this for free. Someone with limited computer experience can have this done in less than ten (10) minutes. This allows the user to create a unique PIN to lock down their credit file for any attempts. But, don’t lose your PIN or it is difficult to get your identity back!

Aver

Digital Identification Through AI

Thanks to Jesse Lama

Stephen Hyduchak

Written by

Blockchain, Identity Verification, AI and Cannabis keep me up at night. CEO of Bridge Protocol and Aver.

Aver

Aver

Digital Identification Through AI

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