Tackling fraud initiated through authorized user abuse

This case study addresses synthetic identity fraud and how to minimize losses in card portfolios  

Situation 

A leading credit card issuer was struggling with rising unrecoverable charges. The firm knew that a portion of card accounts were a result of synthetic identities created via authorized user abuse, but did not have an efficient way to identify them. 

Challenge:
How to minimize losses due to synthetic identity accounts

Solution 

FraudIQ® Synthetic ID Alerts enabled the credit issuer to efficiently identify card accounts likely to be a result of authorized user abuse.

With FraudIQ Synthetic ID Alerts, the credit issuer could: 

  • Pinpoint card accounts that were likely opened using synthetic identities, in which fraudsters had piggybacked good consumers’ credit 
  • Protect against fraud write-off charges resulting from lack of payment on card balance or interest charges from synthetic identity accounts
  • Leverage Equifax AI-driven machine-learning algorithms using multiple data sources to detect synthetic ID behavior and patterns 

Outcome 

FraudIQ Synthetic ID Alerts identified $25M+ in potential losses from over 100,000 new synthetic accounts. 

A portfolio analysis which appended FraudIQ Synthetic ID Alerts to the credit issuers’ card portfolio revealed:

  • Over 100,000 synthetic identity accounts identified during account origination could result in over $25 million in potential charge-offs in just one year
  • Over 62,000 synthetic identity accounts in its existing portfolio could result in over $8 million in potential losses in just one year
  • After seeing the results of the analysis, the credit issuer instituted a one-time scrub of its card portfolio as well as ongoing monitoring during account origination, helping it to protect against millions in fraud write-off charges

Results may vary based on actual data and situation.

Learn more about Equifax solutions for identity and fraud, or read more about FraudIQ Synthetic ID Alerts.

 

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