The paper covers 5 identity fraud types such as AI-powered fraud, money-muling networks, fake IDs, account takeovers, and forced verification. The survey is based on millions of checks across 28 industries worldwide and over 2 million fraud cases between 2022 and 2023 to observe trends, patterns, and changes in identity fraud. Moreover, the study combines internal data with input from internal and external experts, providing conclusions on identity fraud in 2023.
In terms of artificial intelligence and deep fakes, the report that fraud remains the most prominent challenge across various industries. Official representatives from Sumsub emphasized the role of AI as a tool for both anti-fraud solution providers and those committing identity fraud. They also noted that AI-generated deep fakes tenfold increased the number of identity theft, scams, and misinformation campaigns during 2022 and 2023. Moreover, crypto is the main target sector with 88% of all deep fake cases detected in 2023, followed by fintech with 8%.
Sumsub further concludes that AI will be a key focus of regulations in 2024 and that understanding AI safety will become an integral part of companies' activities. In addition to the AI-powered fraud prevention tips, the report provides an overview of AI regulations and a summary of previous actions to regulate deep fakes in other key jurisdictions – EU, UK, and US.
In the past three years, the fraud landscape has evolved with the development of new technologies, signalling a growing concern for businesses and individuals alike. Based on Sumsub's findings, the global rate of identity fraud nearly doubled from 2021 to 2023.
Between 2021 and 2023, online media which includes news websites, streaming services, social platforms, and digital advertising registered a 274% rise in identity fraud rate in the form of fake accounts, engagement manipulation, and the spread of misinformation.
Another high-spread identity fraud pattern in 2023 is money scams such as money muling, a fraud scheme that involves individuals known as money mules, recruited to transfer illegally obtained funds, disguising their origin.
Forced verification is a scam that grew 305% over 2022-2023, raising more concern among experts. Account takeover threat incidents also increased by 155% in 2023. Addressing these statistics, Sumbsub suggests that organisations need to implement stricter rules such as mandatory identification.
The Identity Fraud report concludes with predictions for 2024 in the realm of identity verification and expert insights for implementing valid fraud prevention systems.
Frauds such as account takeover and money muling schemes are expected to continue to propagate on a larger scale as fraudsters will find innovative ways to exploit these tactics. Therefore, regulatory responses are much needed.
In 2024, there will be an increased emphasis on non-document verification and the adoption of alternative methods for identity validation.
Online media are likely to implement stricter rules with mandatory identification regarding online interactions.
The possession of identity data is expected to shift from global storage to being mandatory for local authorities. This improv data security, privacy, and local control over sensitive personal information.
Network analysis should become indispensable to combat fraud, allowing organisations to uncover complex patterns and connections that are indicative of fraudulent activities.
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