Learn about identity theft and how to protect your business and users from it.
According to Sumsub’s recent Identity Fraud Report, the rate of identity fraud has shown a significant increase, nearly doubling from 1.1% in 2021 to 2% in 2023. Moreover, this worrying figure is expected to increase in the future. ID cards appear to be the most commonly used documents for scams and falsification, while the most affected industries include online media, professional services, healthcare, transportation, and video gaming.
Here you can see the fraud highlights for 2023 by industry.
Indeed, businesses are often vulnerable to cyber attacks, and fraudsters will seize any opportunity to gather sensitive data to use for identity fraud. However, with the right anti-fraud controls in place, companies can avoid having to deal with false bank accounts, fake licenses, screaming headlines and police investigations.
In this article, we’re going to cover the most common identity theft types and how businesses and customers can protect themselves.
Identity theft is when personal information—such as name, date of birth, address, bank account, emails—is stolen to make purchases, open accounts, withdraw money and get tax refunds. This allows fraudsters to use their victim’s identity for illicit purposes.
Be it through cyber attacks or data leaks, identity thieves often target small and medium-sized businesses to scavenge personal data, which leads to significant reputational damage and losses. According to Statista, business email compromises alone amounted to around $2.7 billion in reported victim losses in 2022.
Fraudsters can target individuals directly by stealing mail or scavenging personal information on Facebook, Twitter or Instagram. They can also hack emails, bank accounts, or buy data from the “dark web”.
Here are the most common identity theft methods:
Fortunately, fraudsters also make mistakes, and there are ways to stop them before they try to hurt customers and businesses.
Being aware of blind spots and incorporating certain practices can considerably reduce the risks of fraud. Below we share some advice on secure methods of identity theft prevention for businesses and their customers.
1. Protect sensitive data
2. Establish data protection policies
Develop and incorporate guidelines on how your business handles and stores customer information—including how the business accepts payments and performs client identification.
3. Set customer identification rules
Fraud incidents lead to many consequences, including law enforcement investigations and chargebacks, meaning financial and reputational losses for the business.
Security is key to the success of any financial business—especially those that deal in the personal data of thousands or millions of people. Businesses should focus on their internal practices and study their security needs step by step as there is no defense that suits all.
2023 saw a continuation of the trends established in prior years. In Sumsub’s Identity Fraud Report 2022, the top 3 fraud trends identified were deepfake usage, complex fraud patterns, and advanced forgeries. In 2023, these trends not only persist, but also continue to evolve dynamically. The most popular identity fraud types of the year include:
Notably, AI-powered fraud has shown an increase of 1,000% in 2023 in comparison to 2022. In the EU specifically, we can see the top 5 countries by deepfake growth (2022–2023) below:
Identity fraud tends to target non-regulated industries more often. This is primarily due to a lack of strict regulations and verification requirements, which make it easier for fraudsters to exploit weaknesses. The online media sector saw the biggest rise in identity fraud, growing from 1.56% to 4.27% between 2021 and 2023.
Online media, which encompasses news websites, streaming services, social platforms, and digital advertising, faces an escalating risk of fraud. Large audiences and insufficient regulations create an environment susceptible to fake accounts, engagement manipulation, and the spread of misinformation. Experts anticipate companies in this sector to implement stricter rules such as mandatory identification, similar to measures already being taken in China.
More and more countries are becoming targets for fraudsters and identity thieves, with Bangladesh, Pakistan, Latvia, Hong Kong, and Tanzania witnessing the highest rates of identity fraud in 2023.
Bangladesh and Pakistan were already the most fraud-vulnerable countries in 2021 and 2022. They continue to top the list in 2023, although rates have decreased over the years. Remarkably, identity fraud rates in Latvia and Hong Kong have more than doubled this year compared to 2022, joining the top 5 countries most prone to fraud.
In Europe, Latvia, Estonia, and Ukraine have seen a noteworthy increase in identity fraud rates between 2021 and 2023, with Latvia experiencing a significant jump from 1.70% to 4.05%.
The top 10 countries in Europe with the highest percentage of fraud in 2023 are:
Meanwhile, the top 10 countries in Europe with the lowest percentage of fraud in 2023 are:
To learn about our predictions for 2024, download our latest fraud report.Download the report
E-commerce, finance (online banking) and social media.
If you are a business owner:
The best way to protect your identity is to follow a set of everyday rules, including:
It would be useful for clients to monitor credit and tax reports and banking statements, check medical information and beware of unusual account alerts. For business owners, a reliable KYC solution and biometric verification are must-haves.
According to our internal statistics, the rate of identity fraud has shown a significant increase, nearly doubling from 1.1% in 2021 to 2% in 2023. Moreover, global account takeover incidents increased by 155% in 2023.
In 2023, Bangladesh, Pakistan, Latvia, Hong Kong, and Tanzania witnessed the highest rates of identity fraud. Bangladesh and Pakistan were already the most vulnerable countries to fraud in 2021 and 2022. They continue to top the list in 2023, although rates have decreased over the years. Remarkably, identity fraud rates in Latvia and Hong Kong have more than doubled this year compared to 2022, joining the top 5 countries prone to fraud.
According to our internal statistics, the US experienced a significant jump in identity fraud rates, from 1.04% in 2021 to 2.30% in 2022. However, there was a subsequent decrease in 2023, settling at 1.68%.
Subscribe to continue reading
Enter your email address to get access to the full article