Synthetic Identity Fraud: The Next Frontier in Cybercrime
What is Synthetic ID Fraud?
Synthetic identity fraud occurs when criminals combine real data (for example, a stolen or fictitious Social Security number) with fabricated information such as fake names, addresses, and birthdates, to create entirely new identities. These identities can age, build credit history, and, with the advent of artificial intelligence, have realistic faces, social media profiles, and participate in voice and video chats. In the end, synthetic identities can, and have been used to commit large-scale fraud.
Recent data shows the growth is steep:
TransUnion reports U.S. lender exposure to synthetic identity fraud reached around $3.2 billion by mid-2024.
TransUnion’s 2023 global fraud report found synthetic identity fraud to be the fastest-growing form of digital fraud worldwide.
Sumsub warns that synthetic identity document fraud surged 300% in Q1 2025 year-over-year in the U.S.
Deloitte projects losses from synthetic identity fraud could reach $23 billion by 2030.
Bottom line: Synthetic identity fraud is one of the fastest-growing financial crimes in the U.S., especially in credit and digital channels.
Why It’s Escalating
Several key dynamics make synthetic identity fraud especially dangerous:
Mass data breaches: Decades of breaches have exposed billions of personal records—SSNs, DOBs, addresses—now traded on dark-web markets.
Verification gaps: Automated credit systems often create new credit files when synthetic identities apply for credit products.
Long-game tactics: Fraudsters build credit histories over time, making them appear legitimate before executing large “bust-outs.”
Technology acceleration: Generative AI, deepfakes, and realistic document forgeries make synthetic identities far more convincing.
Impact on Individuals, Institutions & Government
Individuals: Victims—often children, the elderly, or deceased persons—can spend years repairing damaged credit histories.
Financial institutions: Banks, lenders, and fintechs bear billions in losses when synthetic borrowers default.
Government programs: Relief funds and benefits programs are at risk when synthetic identities slip through.
Consumers at large: Higher fees, stricter verification, and reduced access to credit are downstream effects.
A 2021 case in Florida, U.S. v. Hasan Brown, highlighted how one synthetic-identity ring exploited the banking industry and government programs to steal over $24 million—demonstrating the enormous scale one operation can reach.
Protecting Against Synthetic Identity Fraud
Individuals
Monitor credit reports from all three bureaus for yourself and your family (including children!) regularly.
Place credit freezes or fraud alerts to prevent unauthorized account openings.
Protect your children’s SSNs… many victims of synthetic fraud are minors.
Consider using reputable dark-web and SSN monitoring services to detect misuse early… but also understand they are limited in what they can see and do.
Businesses
Implement multi-layered identity verification (document analysis, biometrics, and behavioural analytics).
Watch for cross-identity patterns (same device, phone, or IP across multiple “customers”).
Join industry consortiums that share synthetic-fraud intelligence.
Regularly update AI-based fraud-detection tools and employee training
The Bottom Line
Synthetic identity fraud is reshaping how identity, credit, and trust work in the modern economy. For institutions and individuals alike, prevention and preparedness are critical.
Whether you’re a lender, fintech, or consumer navigating identity risks, the time to act is now.
This article is provided for informational purposes only and does not constitute legal advice. Reading it does not create an attorney–client relationship between you and the author or Dynamis LLP. You should not act or rely on any information in this article without seeking professional counsel tailored to your particular situation.