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Synthetic ID fraud detailed in new Fed white paper
The Federal Reserve released a new white paper Wednesday on synthetic identity fraud in the U.S. payments system and how financial institutions can detect potential scams to prevent financial losses. NAFCU works closely with the Fed on ways to make the payments system more secure, and has kept credit unions informed of the danger of the fraud.
In the report, the Fed explains how synthetic identities are created with real, legitimate information combined with false information. The Fed also flags that fraudsters have gone as far as appearing in person with fake credentials and creating social media around their fake personas.
Learn more about this type of fraud and how financial institutions can protect themselves.
NAFCU continues to lead on the issue of faster payments, having served on the Fed's Faster Payments and Secure Payments Task Forces. NAFCU has also met with a number of Federal Reserve Bank presidents to discuss payments and will meet with the Federal Reserve later this year to present findings from NAFCU's Annual Report on Credit Unions and discuss issues critical to the industry.
At NAFCU's Annual Conference and Solutions Expo earlier this year, Tim Boike from the Federal Reserve Bank of Chicago updated attendees on the Fed's ongoing payments efforts. Boike previously shared with NAFCU's Cybersecurity and Payments Committee the Fed's initiative to identify and mitigate synthetic identity payments fraud.
The Fed has also established a Fraud Definitions Work Group, which is developing a more consistent and holistic view of the terminology used and other ongoing efforts to reduce fraud risk and advance the safety security and resiliency of the U.S. payments system.
As the Fed works to develop a real-time payments system – the FedNow Service – NAFCU has reiterated the need for a national data security standard to supplement a safer and faster payments system.