Signicat, a digital identity and fraud prevention solutions firm, has unveiled a new report highlighting the increasing threat of AI-driven identity fraud.
Conducted in partnership with independent consultancy Consult Hyperion, the research, titled “The Battle against AI-driven Identity Fraud,” examines the experiences of fraud prevention decision-makers across Europe, revealing a surge in AI-driven identity fraud and a lack of preparedness to combat it.
The study, which surveyed over a thousand fraud decision-makers from Belgium, Germany, the Netherlands, Norway, Spain, Sweden, and the UK, found that the rise of deepfakes and social engineering attacks has significantly intensified. Three years ago, AI was primarily used for creating synthetic identities and forging documents. Today, it is employed extensively for deepfakes, posing a substantial challenge to financial institutions, insurance providers, payment providers, and fintechs.
One of the key findings is the alarming success rate of AI-driven fraud attempts. Approximately 42.5% of detected fraud attempts use AI, with nearly 29% of these attempts being successful. For some organisations, AI usage in fraud attempts is as high as 70%. Furthermore, AI-driven attacks account for 38% of revenue loss to fraud. Account takeovers, previously considered a consumer issue, have emerged as the most common type of fraud in B2B organisations.
Despite the high awareness of the threat posed by AI-driven identity fraud, the report highlights a significant gap in understanding its nature and the best prevention technologies. While over three-quarters of businesses have teams dedicated to addressing AI-driven identity fraud and are upgrading their fraud prevention technology, less than a quarter have implemented measures to combat it.
The report underscores that AI is not yet making fraud materially more successful. However, the volume of AI-driven fraud attempts is expected to rise, signalling an inflection point where fraud levels could explode. The shift from creating new accounts using forged credentials to compromising existing accounts is a notable trend. Weak or reused passwords are often exploited in these account takeover attacks, with deepfakes being used to impersonate account holders.
“Fraud has always been one of our customers’ biggest concerns, and AI-driven fraud is now becoming a new threat to them. It now represents the same amount of successful attempts as general fraud, and it is more successful if we look at revenue loss,” said Asger Hattel, CEO at Signicat.
“AI is only going to get more sophisticated from now on. While our research shows that fraud prevention decision-makers understand the threat, they need the expertise and resources necessary to prevent it from becoming a major threat. A key part of this will be the use of layered AI-enabled fraud prevention tools, to combat these threats with the best technology offers.”
David Birch, Director at Consult Hyperion, added, “It is essential that financial firms have a robust strategy for AI-driven identity fraud. Identity is the first line of defence. Identity systems must be able to resist and adapt to ever-changing fraud tactics, to protect legitimate customers and ensure the reputation of the service.”
To address these challenges, Signicat offers comprehensive digital identity solutions, including automated user identity verification, national digital identity schemes, authentication, and legally binding electronic signatures.
By adopting a layered approach, Signicat helps organisations stay ahead of AI-driven fraud with data enrichment, verification solutions, and ongoing identity monitoring to prevent fraud beyond customer sign-up.
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