Khushbu Jain is a practicing advocate in the Supreme Court
Synthetic identity fraud has become a significant concern in the digital age, as it allows fraudsters to exploit vulnerabilities in financial systems by creating fictitious identities. This method typically involves combining real personal information like a Social Security number or an address with fabricated details, resulting in a synthetic identity that can evade detection by traditional verification processes.
In today's digital landscape, identity has indeed emerged as a vital currency, and safeguarding personal identities is becoming as crucial as protecting financial assets. As consumers increasingly engage in online activities, financial institutions recognize the importance of ensuring that their customers' identities are secure.
How Synthetic Identities Are Created
The process usually begins by obtaining a real government identity card number such as PAN, AADHAAR, driving license etc, often from someone who is unlikely to notice irregularities. This is most commonly done by stealing IDs from the elderly or individuals who are not active or they don’t frequently check their credit scores. Counterfeit or manipulated identity documents like driving licenses, voter IDs, or passports may be used to support the synthetic identity.
Once a valid identity number is obtained, criminals combine it with made-up information, such as a fake name, address and birthdate. To further build the credibility of the synthetic identity, fraudsters may apply for small loans or lines of credit using the new identity. Even if these initial applications are denied, the attempt can still result in the creation of a credit file for the synthetic identity. Over time, as the fraudster continues to apply for and use credit under the synthetic identity, they build a legitimate-looking credit history, making it easier to access larger sums of money.
Synthetic identity fraud remains a significant and evolving threat to India’s financial sector. While progress has been made in detection and prevention, continuous innovation, collaboration between stakeholders, and investment in advanced technologies are essential to combat this menace. As India continues its digital transformation, the battle against synthetic identity fraud will remain a critical focus for regulators, financial institutions, and technology providers alike.
