AuthenticID Report Shows Deepening Financial Sector Threat
Identity fraud rates reached 2.1% of transactions in 2024, marking a significant increase from 1.27% in 2022, according to new research from AuthenticID, an identity verification provider.
The rise coincides with the growing adoption of artificial intelligence tools by fraudsters targeting financial institutions.
The report, which analyses data from AuthenticID's identity verification platform and surveys of businesses conducted in Q4 2024, indicates that 46% of financial institutions experienced an increase in deepfake-related fraud attempts over the past year.
Deepfakes, which use AI to create synthetic media that cFan bypass traditional verification methods, now represent a primary concern for risk management teams.
Emerging Fraud Patterns
Financial institutions face particular exposure to synthetic identity fraud, where criminals combine real and fake personal information to create new identities. The practice enables fraudsters to build credit profiles over time before executing larger-scale fraud.
"Identity fraud with all of the current technology and the ability to use the dark web to create fake identities will continue to escalate and require subject matter experts and appropriate training and technology to thwart attacks," says Garry Clement, Chief Anti-Money Laundering Officer at Versa Bank, a Canadian digital bank.
Payment processors demonstrate heightened vulnerability, with unauthorised transactions and social engineering tactics enabling rapid fund transfers before detection systems can flag suspicious activity.
The report identifies a 250% increase in account takeover attacks, where criminals gain unauthorised access to legitimate accounts.
The research reveals clear temporal patterns in fraud attempts. Peak activity occurs on Tuesdays and Fridays, with notable seasonal spikes during tax season in April, summer launch in July, and the December holiday period.
"Identity fraud with all of the current technology and the ability to use the dark web to create fake identities will continue to escalate and require subject matter experts and appropriate training and technology to thwart attacks"
The data shows fraud attempts concentrate between 1:00 PM and 2:00 PM, suggesting coordinated efforts by fraud networks.
In the US, Pennsylvania records the highest fraud rate at 16.62% of transactions, followed by Maryland at 7.40%.
The geographic distribution of fraud attempts indicates concentrated activity in specific regions, with varying rates across different state jurisdictions.
Digital Identity Evolution
The research indicates an acceleration in adoption of digital identity solutions, with 54% of consumers now using or planning to adopt digital wallets. However, mobile driving licences show slower uptake at 33% of consumers.
Twelve US states now operate mobile driving licence programmes with cross-platform compatibility, while over two dozen others are conducting pilot schemes or implementing interoperability measures.
AuthenticID's data reveals that Employment Authorisation Cards trigger the highest fraud rates at 4.79%, followed by passport cards at 4.41%. State-issued identification documents demonstrate lower but still significant fraud rates.
Scott Goessling, CEO of SYFRR, a lending technology provider, reports: "SYFRR continues to see significant increases in identity fraud, identity theft, and first-person fraud in both online and in-person lending and account opening processes. Application, data security, and multiple layers of anti-fraud systems continue to be SYFRR's largest expense."
For gig economy platforms, identity fraud affects one-third of US users, with millennials representing the primary target demographic. The sector faces particular challenges around payment method verification and user authentication.
Blair Cohen, President and Founder of AuthenticID, notes: "Despite the sophistication of deepfake technology, subtle clues in language and context can sometimes betray their authenticity. As the battle against misinformation intensifies, the quest for effective safeguards and consumer education against deepfakes remains imperative."
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