Why Identity Fraud is Getting Harder to Catch

Why Identity Fraud is Getting Harder to Catch

The shift to digital was taking place well before COVID-19, but the pandemic, as well as advances in AI and alternative data, have helped accelerate the adoption and use of digital technology. 

Organisations that fail to adapt risk being overtaken by rivals who are more open to innovation and growing numbers of businesses are realising the necessity of, not just being online, but providing a first-class digital experience.

This acceleration in growth has had a massive impact on the way we live our daily lives, but it’s also had an impact on how exposed our identities can be to fraudsters.

Below is a list of all the topics we will cover in this article. Go ahead and click on any of these links, and you’ll be taken to that specific section.

Fraud is on the Rise

Fraud is on the rise globally and fraudsters are continually developing new ways to attack businesses and customers. Millions of people are affected by fraud every year and according to The Federal Trade Commission (FTC), consumer losses due to fraud totaled more than $3.3 billion in 2020.

Fraud is a global problem affecting all organisations worldwide, but occupational fraud is frequently undetected and often never reported. At the highest level, there are three categories of occupational fraud:

  • Asset misappropriation, which involves an employee stealing or misusing the employing organisation’s resources. This occurs in the vast majority of fraud schemes (86% of cases) but, these schemes also tend to cause the lowest median loss at $100,000 per case.
  • Financial statement fraud schemes, in which the perpetrator intentionally causes a material misstatement or omission in the organisation’s financial statements. These are the least common (10% of schemes) but the costliest category of occupational fraud. 
  • Corruption – which includes offences such as bribery, conflicts of interest, and extortion – falls in the middle in terms of both frequency and financial damage. These schemes occur in 43% of cases and cause a median loss of $200,000.

The ACFE’s most recent study is the largest worldwide on occupational fraud and includes perpetrator data from more than 2,000 fraud cases. The study found that:

  • 80% of perpetrators received some sort of punishment, with many organisations dealing with fraudulent individuals in-house and dealing out corresponding punishments.
  • Over a quarter of fraud cases studied resulted in a civil lawsuit where most resulted in judgement for the victim, the median loss being $400,000.
  • Nearly two-thirds of cases were referred to law enforcement and over half of these had a guilty plea entered.
Digital Fraud

As online activity has increased, so too has the risk of online fraud and fraudsters are continually developing more sophisticated ways to attack businesses and customers; 37% of respondents in our survey said either they or a friend had been directly affected by identity fraud.

In our Annual Identity Survey, those who work in the banking industry list cybercrime as the leading risk for banks and according to Barclays Bank, there was a 66% increase in reported scams in the first six months of 2020 compared with the last six months of 2019. Fraud volumes also rose 61% between May and July 2020.

There are a number of reasons fraud has risen, the global pandemic for one but mainly:

  • A greater number of mobile transactions.
  • More sophisticated synthetic IDs.
  • More goods and services are sold online.
  • More cross-border transactions.
  • More automated botnets.

These scenarios are more susceptible to online fraud and in the current economic climate, it’s never been more important to make sure your anti-fraud measures are up to scratch. 37% of respondents in our Annual Identity Survey said either they or a friend had been directly affected by identity fraud in the last 12 months, and according to PwC’s bi-annual Global Economic Crime and Fraud Survey, 47% of companies have experienced fraud in the last two years.

Fraud is on the rise and fraudsters are getting smarter, but with the right partner and tools, you can minimise the risk of fraud to your business and customers. Identity has changed and so too should the way we tackle identity fraud.

How We Can Help

We’re proud to have provided anti-fraud solutions for a number of global, high-profile clients in over 91% of the world. We’ve worked with innovative businesses that are challenging the norm and finding new ways to protect and provide value for their customers.

Prevent the risk of fraud for your customers with our suite of global identity verification solutions. Sodium, our single, universal API, enables customer verification in real-time. Utilise a single element or multiple processes – it’s entirely up to you. Learn more about how we can help to automate and simplify your verification processes to help you gain a better understanding of your customers.

Book a demo today and see for yourself how powerful our suite of solutions are.



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