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Synthetic identity fraud has become the fastest growing form of digital fraud, totaling $3.1 billion in 2023, up from $1.9 million in 2020, a 63% increase, according to TransUnion LLC’s 2024 State of Omnichannel Fraud Report.
Criminals are using synthetic identities, which are created from a combination of real and fabricated credentials to create an identity not associated with a real person, to obtain credit cards from bank card issuers and retailers, auto loans and unsecured personal loans, according to the report.
Helping fuel the rise in synthetic identity fraud is the growing number of data breaches, which increased 15% year-over-year in the United States in 2023 and which have more than doubled since 2020.
“Data breaches are a leading indicator of future fraud as cybercriminals steal credentials in unprecedented numbers,” the report says. “Identity data or personally identifiable information is a core target of cybercriminals. They’re using all means possible, targeting organizations and consumers alike, to harvest identity credentials to fuel fraud schemes.”
Identity theft, which occurs when a criminal uses a consumer’s actual credentials to open an account, also remains a problem, accounting for 6.9% of all digital fraud in 2023, an 11.2% increase from a year earlier.
Account takeover, which occurs when a cybercriminal gains unauthorized access to a user’s online account, accounted for 7% of digital fraud in 2023, an 11.1% increase from 2022. Credit card fraud accounted for 6.9% of digital fraud in 2023, up 7.7% from 2022, while ACH/debit fraud accounted for 6.4% of digital fraud in 2023, a 7.3% increase from the previous year.
Retailers had the highest rate of digital fraud in 2023, surpassing online gaming, accounting for 8.7% of digital fraud globally in 2023, a 21% increase from 2022.
“In recent years, the global retail industry has consistently been among those with the highest suspected fraud attempt rates. However, in 2023, we saw it climb to the top of the list,” Cecilia Seiden, vice president of TransUnion’s retail business says in a statement. “As a result of credentials stolen in data breaches, often in industries other than retail, it has become increasingly easy for fraudsters to perpetrate attacks that leave retailers vulnerable to account takeover.”
For transactions where the consumer or fraudster was located in the U.S., however, gaming continues to see the highest digital fraud rate, up to 10.9% in 2023 from 10.0% in 2022, followed by retail which had a 6.1% fraud rate in 2023, a 7% decrease from 2022, the report says.
Consumers are regularly targeted with scams to gain access to accounts or deception to steal funds, according to the report. Some 54% of consumers reported being targeted by an email, online, phone call, or text messaging fraud scheme, and 11% said they fell victim to such scams between September and December 2023.
“Among those who said they were targeted, phishing (fraudulent emails, websites, social posts, QR codes, etc. meant to steal data) at 33%; smishing (fraudulent text messages meant to trick you into revealing data) at 29%; and vishing (fraudulent phone calls meant to trick you into revealing data) at 27% were the leading types of fraud consumers reported experiencing,” the report says.
