The Top-5 identity fraud types in 2023 are: AI-powered fraud, money muling networks, fake IDs, account takeovers and forced verification.

Sumsub today released its third annual Identity Fraud Report of the year. The report provides a comprehensive analysis of identity fraud across industries and regions based on millions of verification checks across 28 industries and over 2,000,000 fraud cases between 2022-2023*.

Identity Fraud Main Trends and Statistics for 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’s 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 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: Ambivalent Potential

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 serves as a powerful tool both for anti-fraud solution providers and those committing identity fraud. Our internal statistics show an alarming tenfold increase in the number of 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 having come 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.

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, fueling 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. To tackle all these alarming trends, organizations need to implement stricter rules such as mandatory identification. 

Overall, in the past three years the fraud landscape has evolved with the development of new technologies, signaling a growing concern for businesses and individuals alike. Based on Sumsub findings, the global rate of identity fraud nearly doubled from 2021 to 2023.

Verification and Identity Fraud Prevention in 2024: Expert Insights

The Identity Fraud Report concludes with predictions for the next year in the realm of identity verification, as well as 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 organizations 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, please go to https://sumsub.com/fraud-report-2023

* Note on Sumsub’s research methodology

Sumsub research compares data from 2022 and 2023. In certain cases, 2021 data is also taken into account to observe trends. The study is based on aggregated and anonymized verification statistics on millions of users from 28 industries worldwide, with 2,000,000+ fraud attempts studied. The report analyzes trends, patterns, and changes in identity fraud to gain valuable insights. The study combines internal data with input from internal and external experts, providing well-rounded conclusions on the state of identity fraud in 2023.