The Federal Reserve Board ("FRB") highlighted the increasing dangers of synthetic identity payment fraud.

As explained in a new FRB white paper titled Synthetic Identity Fraud in the US Payment System, A Review of Causes and Contributing Factors, synthetic identity fraud is different from traditional identity fraud in that fraudsters use both fictitious and real information, such as an individual's social security number ("SSN") or name, to create a false identity. The FRB warned that traditional fraud models are often unable to detect and flag identities as stolen that were present in financial portfolios.

The FRB attributed the increase in synthetic identity fraud to the wider use of SSNs. Specifically, FRB reports that the randomization of SSNs in 2011 eliminated the geographical significance of the first three digits of the SSNs, making it easier to fabricate false SSNs.

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