Close to 60% of banks in Asia-Pacific say at least a few of their customers have attempted to commit fraud by fabricating identities, according to a poll by FICO.
More than one in five banks said fraudulent applications for credit cards represent 5-10% of the total.
FICO surveyed 37 executives from financial institutions across the region at the annual FICO Asia-Pacific Fraud Forum held in Bangkok last October.
"Identity fraud was a growing problem in 2017," said Dan McConaghy, president for Asia-Pacific. "As prevention technologies have improved, helping stop activities such as card skimming, criminals are now stealing identities or constructing fake [personas] to get real credit cards."
Synthetic identity fraud occurs when new identities are fabricated by blending elements from multiple individuals, making the uncovering of fraudulent transactions more complicated. Scammers take these new identities and apply for accounts to give validity to their new personas. Products like pre-paid credit cards, utility bills and personal loans may all be used as a starting point to build credibility and creditworthiness in a process that can take a criminal months, sometimes years to complete.
FICO said 44% of banks believe social platforms and mobile apps are the most likely to suffer data breaches.
"The availability of personal information online via social media platforms and mobile apps has made it easier for culprits to mix fake and real personal information," said Mr McConaghy. "Not only are they stealing data from profile information that is open on the web, they are also breaching poorly defended mobile apps that collect personal information."
There is a lot of data which criminals can use to apply for credit cards fraudulently, and dealing with application fraud was the key priority for four in 10 banks in 2018.
Half of banking respondents in the survey reported an increase of 25-50% in card testing. This is an activity whereby criminals assess the fraud rules of banks to determine which purchase categories will result in cards being blocked rather than approved. A further quarter of respondents said such behaviour had grown 50-100%. This growth demonstrates the increasing sophistication of organised fraud rings.
"The rise in card testing is significant because small purchases often seem unremarkable to both banks and customers," said Mr McConaghy. "Fraud analytics is really the only way to block more fraud, because it can 'see' new fraud patterns."
One of the new analytic techniques used for gaining favour as the fraud environment shifts to data breaches and identity theft is identifying common points of purchase for compromised cards.
This is achieved by using analytics to link transactions that were later determined to be fraudulent.
