BETHLEHEM, Pa. — According to Edentify CEO Terrence DeFranco, reports that identity theft is on the decline should be taken with a grain of salt. "Most surveys are only related to one category, that which the victim knows about," said DeFranco. "The reality is usually the victim is the last to find out and in many cases of identity fraud the victim never finds out, so it is like saying I'm going to track murders only but not the overall crime in an area–it's very misleading."

What further complicates the identity fraud issue is that as financial institutions and consumers get better at protecting against true name fraud synthetic identity fraud continues. DeFranco says that this particular type of fraud is more of a crime against an organization rather than an individual victim.

"Synthetic identity fraud goes to the manipulation of personal information where an existing set of information is altered and/or the creation of an identity where the information is manufactured including a fictitious name or creating a Social Security number," said DeFranco. "The first takes advantage of the matching logic of databases and the second where the identity itself has no basis of truth to it, is most useful in environments where the acceptor is looking for negative information–a bankruptcy or felony for example." The greatest challenge with this particular type of fraud is that it preys on a potential operations flaw in how information is gathered, stored, shared and authenticated. "While you would think there is some truth database out there with accurate information, it doesn't exist," said DeFranco. "The information is whatever is provided by other databases and credit bureaus and no one is there saying send that name into me and match it to the file to make sure all the information is consistent. All they do is accept the version of ID provided by the creditor and try to match. Depending on how well they match is based on how well the ID information is grouped." He adds that there is already a matching logic built into large databases that take into consideration the natural variations that take place such as the incorporation of a middle name, the difference between a married and maiden name or even grouping the proper Social Security number to a name. "From a fraudster standpoint a typo of a Social Security number linked to a different last name in a first time credit application that is inadvertently approved is the first step in perpetrating identity fraud," said DeFranco. "Moving forward the altered version is accepted as true as previous versions–resulting in the creation of one fictitious identity that is very useful in getting around negative background checks, credit reports etc. Being grouped with the original identity allows fraudsters the benefit of association with that ID and looking like a different person."