Fed Warns U.S. Firms Failing To Tackle Synthetic Payment Fraud

Financial institutions in the United States are still failing to grapple with ballooning payment fraud perpetrated by criminals using made-up identities, the Federal Reserve has warned.

In a white paper issued on Tuesday, the regulator instructed firms how to avoid on-boarding customers hiding behind “synthetic identities,” which are typically based on a misappropriated or false social security number.

Those behind the fraud type combine that social security number with a combination of fake or real information, such as social media accounts, and a post office box to receive credit cards. Real social security numbers of the elderly, homeless and even children are used.

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