Sumsub, a full-cycle verification platform, today released its third annual Identity Fraud Report of the year. The report comprehensively analyses identity fraud across industries and regions based on millions of verification checks across 28 industries and over 2 million fraud cases between 2022 and 2023.
Sumsub’s research key findings include:
• The top 5 identity fraud types in 2023 are AI-powered fraud, money muling networks, fake IDs, account takeovers and forced verification.
• There has been a significant 10x increase in the number of deepfakes detected globally across all industries from 2022 to 2023, with notable regional differences: 1740% deepfake surge in North America, 1530% in APAC, 780% in Europe (inc. the UK), 450% in MEA and 410% in Latin America.
• The country attacked by deepfakes the most is Spain; the most forged document worldwide is the UAE passport; whereas Latin America is the region where fraud increased in every country.
• ID cards remain the most frequently exploited for identity fraud, accounting for nearly 75% of all fraudulent activities involving identity documents.
• Online media is the industry with the highest identity fraud increase.
Artificial intelligence and deepfakes
With AI-driven fraud remaining the most prominent challenge across various industries, crypto is the main target sector (representing 88% of all deepfake cases detected in 2023), followed by fintech (8%).
“The rise of artificial intelligence is reshaping how fraud is perpetrated and prevented. AI is a powerful tool for anti-fraud solution providers and those committing identity fraud. Our internal statistics show an alarming tenfold increase in AI-generated deepfakes across industries from 2022 to 2023. Deepfakes pave the way for identity theft, scams, and misinformation campaigns on an unprecedented scale,” comments Pavel Goldman-Kalaydin, Head of AI/ML at Sumsub.
AI will be a key focus of regulations in 2024, and companies should take note with the understanding that AI safety is set to become an integral part of their activities. In addition to the AI-powered fraud prevention tips, the report provides an exclusive overview of AI regulations. For instance, China is known to have pioneered deepfake regulation, with the ‘Regulations on the Administration of Deep Synthesis of Internet Information Services’ approved by the Chinese Cyberspace Administration Authority (CAC) in December 2022 and coming into force in August 2023. In the report, readers will find a summary of the primary efforts to regulate deepfakes in other key jurisdictions – EU, UK and US.
African region highlights
• The largest identity fraud growth in the region over the past year was shown by Tanzania (1,1%) and Ghana (0,93%).
• Meanwhile, countries such as Qatar, South Africa, Saudi Arabia, and Mauritius consistently maintained fraud percentages below 1% for three years.
• In the MEA region, Tanzania, Kenya and Nigeria are the top 3 countries with the highest identity fraud rates.
• Among African countries, South Africa (19,7%) and Nigeria (11,5%) have encountered more deepfake attacks than other countries.
“Of concern to South Africans is the astounding rise (by 1200%) in deepfake frauds,” says Hannes Bezuidenhout, Sumsub’s VP of Sales for Africa. “Seen against a rise of 450% in identity fraud for the MEA Region, this poses a significant threat and cause for concern.
Creating deepfakes has become simpler, leading to a surge in their numbers, as reflected in the statistics. Fraudsters use a person's genuine document, extracting a photo to craft a 3D persona. Providers lacking continuous efforts to update deepfake detection technologies are jeopardising businesses and users. Updating these technologies is crucial for modern, effective verification and anti-fraud systems.”
Identity fraud in various industries
The top 5 industries most affected by identity fraud in 2023 are online media, professional services, healthcare, transportation, and video gaming. Online media, encompassing news websites, streaming services, social platforms, and digital advertising, saw the biggest (274%) rise in identity fraud rate between 2021 and 2023. Large audiences and insufficient regulations create an environment susceptible to fraudulent activities like fake accounts, engagement manipulation, and the spread of misinformation.
In 2023, identity fraud patterns continued to shift towards more complex and sophisticated techniques, fuelling more advanced scams and money laundering techniques. Among the most common complex fraud schemes is money muling, where seemingly innocent individuals, known as money mules, are recruited to transfer illegally obtained funds, disguising their origin.
Another disturbing trend is forced verification, when individuals are manipulated into going through KYC for the benefit of fraudsters. This type of scam grew 305% over 2022 - 2023, raising more concern among experts. Account takeover threat demonstrates growth as well; the number of incidents increased by 155% in 2023. Organisations need to implement stricter rules, such as mandatory identification to tackle all these alarming trends.
Overall, 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 findings, the global rate of identity fraud nearly doubled from 2021 to 2023.
Expert insights
The Identity Fraud Report concludes with predictions for the next year in the realm of identity verification and selected expert guidelines for businesses wishing to implement effective fraud prevention systems. Among those insights are:
• The proliferation of account takeover and money muling schemes is expected to continue. Fraudsters will find innovative ways to exploit these tactics, necessitating more robust countermeasures and regulatory responses.
• In 2024, there will be an increased emphasis on non-document verification and the adoption of alternative methods for identity validation, providing diverse and robust options for confirming identities.
• Online media (such as social networks) are likely to implement stricter rules with mandatory identification, thus transforming the dynamics of online interactions.
• The possession of identity data is projected to shift from global storage to being mandatory for local authorities, enhancing data security, privacy, and local control over sensitive personal information.
• Network analysis will become indispensable in efficiently combating fraud, allowing organisations to uncover complex patterns and connections that are indicative of fraudulent activities.
To learn more and download the full Sumsub Identity Fraud Report 2023 for free, go to https://sumsub.com/fraud-report-2023
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