In late June of this year, Visa announced a new tool called Advanced Identity Score (AIS) to help combat new account and synthetic fraud. In a 2020 report, Javelin Strategy and Research found that identity fraud contributed to $16.9 billion in credit union and bank losses.
If you aren't familiar with synthetic fraud, it is a form of identity theft where real and fake data are put together to create an identity. For example, a real social security number with a fake name. Or a real name with the social security number of a deceased person. Synthetic fraud was at the root of the 2017 Equifax hack. It has become popular among hackers due to the increasing amounts of personal data that we put out into the public sphere.
Consumers spend about 15 hours on average to resolve new account fraud. AIS can help reduce and even eliminate, in some cases, identity-related fraud. The tool works by examining identity risks at the point of credit or loan application. Using artificial intelligence and predictive machine learning, AIS creates a two-digit Fair Credit Reporting Act (FCRA)-compliant identity fraud score in near real-time.
Data points that AIS looks at include:
- The frequency of applications within a period of time
- Fraud and suspicious activity
- Bankruptcy data across consumer identity elements
The above is analyzed against additional data from government and law enforcement agencies, self-reported data from consumers, third-party data providers.
“With more than 14.7 billion data records breached since 2013, many of which include sensitive data such as name, tax ID number, and address, new account fraud has been a consistently growing challenge for financial institutions,” Julie Conroy, research director at the Boston-based Aite Group, said in a press release. “Financial institutions are looking for solutions that can help effectively detect synthetic and stolen identities at the time of application. The consortium data and sophisticated analytics that power Visa’s Advanced Identity Score promise to make it a valuable addition to financial institutions’ control framework.”