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Finding Fraud Hiding in Credit Losses

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Fraud is frequently going undetected because it’s being misclassified as bad debt. Organizations are losing significant sums of money to synthetic identity fraud — unknowingly. In a recent Thomson Reuters blog, it was stated, “Estimates about how much financial institutions lose to synthetic ID fraud range from $6 billion to $20 billion per year, but no one really knows because the crime itself is difficult to detect and often goes unreported. In many cases, the only evidence a bank has of being defrauded is a loan default or an unpaid credit-card bill, which the institution eventually writes off as a credit loss.”1

Synthetic identity fraud is the use of a combination of personal information (PI) to fabricate a person or entity in order to commit a dishonest act for personal or financial gain. See "What is Synthetic Identity Fraud?" for more on this important topic.

Unfortunately, the challenges don’t stop there. When fraud is misclassified, it can make it harder to find and mitigate fraud, leaving organizations even more exposed. Plus, the time it takes to collect on bad debt puts a drag on productivity and resources. Ultimately, the resulting operational inefficiencies and lack of visibility can be far-reaching, impacting everything from debt recovery efforts to the customer experience to provisions for credit losses.

For more exclusive insights about this growing challenge for Canadian vendors, download the just-released white paper, “Could Synthetic Identity Fraud Be Hiding in Your Credit Losses?"


Synthetic identity fraud will keep rising. What’s your plan?

The key to fighting synthetic identity fraud is to stop it at origination. And that requires possessing real-time capabilities to determine if an identity is an actual customer or a case of fraud.

That’s where TransUnion TruValidate™ Identity Exchange, an industry leader in fraud capture rates, can come into play.  

Identity Exchange aggregates TransUnion data and insights into more than 28 million Canadian data identities to enable real-time identity risk assessments — even among new-to-credit or new-to-country consumers. With it, lenders can confidently serve more consumers while helping prevent future losses in real time.

“Based on my industry experience, searching for fraud once it hits the collections bucket isn’t realistic for most lenders. The time and effort it takes — often for low recovery rates — can be costly and inefficient. Instead of investing money and resources in credit losses, lenders can invest in Identity Exchange — which is a smart investment in fraud prevention, financial inclusion and profitability,” says Patrick Boudreau, Head of Identity Management and Fraud at TransUnion. 

To learn more about how TruValidate Identity Exchange works, download the white paper now or contact us to speak with an expert.


1 Synthetic identity fraud: Can your team recognize it? (Permission received from Thomson Reuters)


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