Rise in Synthetic Fraud Linked to Advances in AI Technology

Credit agency reports significant increase in identity fraud cases due to AI's role in identity fabrication.

The rise of artificial intelligence (AI) technology is facilitating a marked increase in synthetic fraud, a type of identity theft that involves the use of both fake and real information to create new identities.

Experian, a credit information firm, has reported a 60% annual increase in confirmed and potentially fraudulent credit applications for the year 2024 when compared to the previous year.

This surge highlights the evolving tactics of criminals, who are leveraging AI to assemble large volumes of synthetic identities for fraudulent purposes.

Historically, perpetrators of synthetic identity fraud relied on less sophisticated methods, such as rummaging through garbage or accessing publicly available records.

However, advancements in AI have significantly streamlined the process.

Criminals can now quickly compile realistic fake identity documents that are nearly indistinguishable from legitimate ones.

As a result, detecting and preventing such fraudulent applications has become increasingly challenging for financial services.

In a survey conducted by YouGov on behalf of Experian in February 2025, which included over 500 financial service companies in Britain, it was found that only a quarter of respondents feel confident in their ability to combat the threat of synthetic identity fraud.

Tristan Prince, Fraud and Financial Crime Director at Experian UK & Ireland, noted the shift in the crime landscape, stating that access to compromised personal data on the dark web, coupled with cutting-edge AI capabilities, has drastically reduced the effort required to create or steal identities.

Criminals are employing AI technologies to generate images, fabricate identities, establish email accounts, and develop sophisticated social engineering schemes.

This transformation in methods is reflected in the data, demonstrating a concerning rise in the incidence of synthetic identity fraud.

In response to this growing threat, many companies are turning to AI solutions to enhance their ability to detect fraudulent applications at scale.

Experian has emphasized the necessity for a multi-layered approach to fraud prevention that integrates biometric and behavioral technology.

The firm reported that it has successfully prevented over £9.5 billion in fraudulent applications across the UK and Ireland over the past five years, showcasing the potential for AI in both enabling and combating fraud.