Equifax has launched a new fraud detection solution aimed at combating synthetic identity fraud, which is a growing issue in consumer lending portfolios.

This product, named Synthetic Identity Risk, aims to assist lenders in identifying fabricated identities earlier in the credit lifecycle—either during account setup or ongoing management of an account.

In synthetic identity fraud, real personal data is mixed with fictional information to create a false identity. Such identities are often utilized to open new credit accounts or apply for loans, where payments might be made initially before ceasing altogether to establish credibility. Due to their apparent legitimacy, these profiles can remain undetected by lenders until significant financial losses occur.

Synthetic Identity Risk’s Approach

Equifax claims that Synthetic Identity Risk evaluates a range of identity characteristics, credit history, and behavioral signals to determine the probability that an application or account is associated with a synthetic identity. The system reportedly employs machine learning techniques designed to uncover patterns not typically visible through standard fraud assessment methods.

According to Equifax data, the typical loss resulting from confirmed cases of synthetic identity fraud since January 2022 averages approximately USD 13,000 based on reported credit files. These losses are usually absorbed by lenders upon detection of fraudulent activities.

Equifax representatives highlight that this product is designed to enhance proactive fraud prevention efforts, enabling organizations to identify hidden risks within their portfolios and avoid solely relying on post-incident recovery strategies. They note that as fabricated profiles become increasingly similar to genuine consumer data, managing synthetic identity fraud has become more challenging.

The company mentions that Synthetic Identity Risk leverages technology currently under patent application and can be integrated into existing verification and monitoring processes for real-time decision support.

Operating in regions such as North America, Europe, and the Asia Pacific, Equifax offers data and analytics services to financial institutions, businesses, and government entities. The firm states that Synthetic Identity Risk is part of its broader strategy to address evolving fraud risks in consumer credit markets.