Synthetic Refund Fraud Rolls Two Frauds Into One

Brett Johnson has been tracking Professional Refund Fraud for close to 8 years and he is reporting a new dangerous variant that has emerged – Synthetic Refund Fraud.

According to Johnson, fraudsters have figured out how to roll two damaging frauds – synthetic identity and professional refunding fraud – into a single monster fraud.

A Way To Make Refunding Fraud More Well Hidden

Synthetic Refund Fraud emerged as a new method to help fraudsters avoid some of the common red flags associated with using prepaid cards and gift cards. Merchants will flag transactions with these types of cards because they have always been associated with high rates of fraud.

Fraudsters will create very “light synthetics” which are often nothing more than a stolen SSN, combined with a hodgepodge of other identifying information like fake names, addresses, burner phone numbers and throwaway email addresses.

They use these synthetics to apply for bank accounts with debit cards and then use those to cards to make purchases at online merchants.

After making purchases, the fraudsters will then claim that they never got the merchandise and the amounts are credited back to the bank account. Fraudsters can run this scheme indefinitely and banks are typically never tipped off because there is often no loss, and no victim associated with the synthetic bank account.

Check out Brett’s video here.