While the payments and cryptocurrency sectors have traditionally been prime targets for identity fraud, a recent report highlighted an increase of more than 21% in attacks targeting the social media sector.
This report, dubbed Q4 Global Identity Fraud Report by AU10TIX, suggested a shift in tactics, with organized crime groups aiming to establish the credibility of fake accounts for later exploitation in money laundering and terrorism financing activities.
According to the report, identity fraud remains a significant threat in the digital world, with organized criminals continuously evolving tactics to exploit vulnerabilities.
New Patterns of Attacks
AU10TIX identified two distinct patterns of "mega" identity fraud attacks: the "sudden burst" and the "slow burn". The "sudden burst" involves a massive influx of fraudulent attempts over a short period. For instance, in 2023, organized criminals executed 22,080 attacks within 2-3 weeks using artificial intelligence.
Conversely, the "slow burn" refers to prolonged attacks involving around 2,000 AI-generated IDs being used 5-6 times per day over 12 months. This trend underscores the sophistication and adaptability of fraudsters in evading detection.
The report portrayed regional disparities in identity fraud activities, with North America and APAC experiencing a surge in attacks on the cryptocurrency sector attacks, driven by the absence of stringent regulations.
Dan Yerushalmi, the CEO of AU10TIX, mentioned: "We detected these mega-attacks by cross-referencing anonymized ID data against AU10TIX’s consortium of 60+ top-tier organizations, demonstrating the power of collective expertise in identifying complex fraud patterns that may evade individual entities. Sophisticated AI and deep-fake technology are helping organized crime groups escalate their attack numbers exponentially, but we will continue working to make the world a safer and more secure place."
In contrast, Europe's implementation of regulations like the MiCA has mitigated attacks despite the recent Bitcoin frenzy. However, identity fraud in the payment sector remains a prevalent concern globally, emphasizing the necessity for strengthening security protocols. AU10TIX offered actionable insights to help organizations safeguard against fraudulent activities in response to the escalating threat of identity fraud.
Actionable Insights
These include leveraging biometrics, implementing robust Know-Your-Business, Know-Your-Customer, and Anti-Money Laundering screening, embracing validation for enhanced privacy and fraud detection, and remaining vigilant of exploitation of social media platforms by fraudsters.
AU10TIX reported that the digital payments sector experienced a surge of 56% in fraudulent activities in its third-quarter report for 2023. Conversely, the cryptocurrency sector reported a decline of 51% in instances of fraud.
Besides that, the report indicated that the payments sector was the primary target for organized fraud groups, accounting for 51% of all the attacks. This represents an upsurge from the previous quarter, where the payments sector accounted for only 32% of attacks. In contrast, the crypto industry witnessed a decline in fraudulent activities, accounting for only 23% of attacks.
North America emerged as the most targeted region for fraud attacks in the payment sector, attributed to economic recovery and increased spending. On the other hand, the Asia-Pacific region faces challenges due to the complexity of digital transactions, presenting a loophole for fraudulent activities.
