There's good news and bad news on the synthetic fraud front. The good news: According to research from TransUnion, big banks are starting to get their arms around the problem. Thanks to more sophisticated detection techniques, a smaller percentage of applicant pools are fraudulent accounts. For the second quarter of 2019, the rate of fraudulent auto loan applications, for example, slid from 0.22% to 0.16% compared to the second quarter of 2018.

The bad news: Small lenders and credit unions are still at a high risk of being targeted by synthetic fraudsters.

Even with these dips at the big banks, synthetic fraud is still an incredibly serious challenge for all banks. In a synthetic fraud, a scammer steals the Social Security number of someone, such as a child, who doesn't already have a credit file and then slowly builds up a credit history by going for low-hanging credit fruit (think department store credit cards). Even if the scammer is rejected for those cards, they've established a credit history that they can then use to apply for increasingly legitimate products until they've climbed up the credit ladder to a car loan, and then they quickly disappear.