Equifax has introduced a new fraud detection product to tackle synthetic identity fraud, a form of financial crime that has increasingly affected consumer lending portfolios.
The company said the product, called Synthetic Identity Risk, is designed to help lenders identify fabricated identities earlier in the credit lifecycle, either at account opening or during ongoing account management.
Synthetic identity fraud typically involves the combination of genuine personal data with invented information to create a new, false identity. These identities are often used to open credit accounts or take out loans, with repayments initially maintained to build credibility before payments are abandoned. Because these profiles can appear legitimate for extended periods, lenders may only detect the activity after losses have accumulated.
How Equifax positions Synthetic Identity Risk
According to Equifax, the new tool analyses a combination of identity attributes, credit history and behavioural indicators to assess the likelihood that an application or account is linked to a synthetic identity. The company said the system relies on machine learning techniques intended to identify patterns that may not be visible through conventional fraud checks.
Equifax data cited by the company indicates that the average charged-off loss associated with a confirmed synthetic identity is around USD 13,000, based on credit files reported since January 2022. These losses are typically absorbed by lenders once the fraudulent activity is uncovered.
Representatives from Equifax said the product is intended to support more proactive fraud prevention, allowing organisations to identify hidden risks within their portfolios rather than relying solely on post-incident recovery. They added that synthetic identity fraud has become more difficult to manage as fabricated profiles increasingly resemble genuine consumers.
The company noted that Synthetic Identity Risk uses technology that is currently subject to patent applications. Equifax also stated that the product can be integrated into existing identity verification and fraud monitoring workflows to support real-time decision-making.
Equifax, which operates in multiple regions including North America, Europe and Asia Pacific, provides data and analytics services to financial institutions, businesses and government bodies. The company said the new product forms part of its broader effort to address evolving fraud risks in consumer credit markets.
