Onfido 2022 Identity Fraud Report: Surge in Sophisticated Fraud Points to Increase in Organized Crime Rings

December 8, 2021 Laura Noye
  • Sophisticated fraud increased 57% over the previous year;
  • Passports overtake National Identity cards as most frequently attacked form of identification
  • INTERPOL contributes to benchmark report linking ID fraud to “organized crime, money laundering and terrorism.”

Onfido today published its 2022 Identity Fraud Report, which reveals a new wave of organized fraud activity entering the marketplace.

Over the past 12 months, 47% of all identity document (ID) fraud was classed as ‘medium’ sophisticated fraud, which is a 57% increase over the previous year. Less apparent errors, such as visibly incorrect fonts, imitated security features, or the wrong photo printing technique, suggest an increase in fraud rings. These organized groups will attempt to create ‘verified’ accounts with fake documents before using them to embark on other types of fraud. The return on this type of attack is greater than taking advantage of other types, such as taking advantage of sign-up bonuses.

Identity theft losses increased 42% in 2020, reaching $712 billion, making digital identity verification critical for enterprises. Whether for financial services, retail, or healthcare, verifying that an online user is legitimate and present defines customer trust and determines if a company is a leader or laggard in the digital economy.

As consumers become more comfortable with digital transactions, fraudsters have remained online with them, as the report found that identity fraud is yet to return to pre-pandemic levels. In 2020, there was a 41% increase in ID fraud, with the average ID fraud rate reaching 5.8%. Over the past 12 months, even though physical restrictions began to lift, the average fraud rate was recorded at 5.9%, showing that fraud still hasn’t dropped back to pre-pandemic levels. The jump in fraud that was a direct result of the pandemic appears to be here to stay. 

“Large-scale operations often undertaken by criminal fraud rings have the resources to conduct sophisticated fraud such as deepfakes, 2D and 3D masks. They might also resort to techniques like coercion. Businesses will see fewer of these types of attacks, but they are the ones that can cause the most damage in the shortest space of time,” said Michael Van Gestel, Head of Global Document Fraud at Onfido. “By incorporating biometric authentication and other sophisticated identity verification methods, businesses can ensure that no matter how fraudsters try to capitalize on the changing situation, they can significantly lower the risk of fraud to their organization and customers.”

Onfido partners with international criminal police organization, INTERPOL, on fraud techniques and learnings. The agency contributed to the report noting “Fraudulent documents open up avenues for serious organized crime, including money laundering and terrorist financing. Consequently, failure to identify fraudulent documents in both real-world and online scenarios poses a threat to the global economy, countries, and their citizens. Increasingly, we have to adapt to the digital use of identity documents, as well as physical. Businesses and governments alike are facing challenges when identifying fraud in this environment.”

The third edition of Onfido’s annual Identity Fraud Report also revealed:

  • Passports became the most frequently attacked ID: Over the past year, passports have overtaken National Identity Cards as the most frequently attacked form of identification. This points to a shift in fraudsters’ methods as they choose to target the one-sided passport page, rather than a two-sided ID card, and target the most high-assurance document in the hope that a passport’s reputation will help the fake go undetected.
  • Fraudsters have ditched the 9-5: Fraudsters have officially ditched the standard working week, as weekend attacks have increased by over 50% since 2019, making fraud much more difficult to predict. It could be because amateurs have moved into the space as part-time fraudsters, or that they’re taking advantage of businesses’ downtime when there are fewer employees to pick up on suspicious activity.
  • Preference to start from scratch: Over 90% of ID fraud in the past year involved counterfeit documents using a complete reproduction of an original document, instead of adapting existing ID. Modern identity documents contain several security features that make any modifications (i.e. forgery) easily detectable, even to the untrained eye - but fraudsters are adapting and making increasingly sophisticated forgeries.
  • Fraudsters turned their attention to retail: Retail fraud increased by 36% year on year, making it one of the most attacked industries, ahead of financial and professional services. 
  • Biometrics is an effective fraud deterrent: Far fewer fraudsters attempted to overcome a biometric verification check than a document check. The average document fraud rate for 2021 was 5.9%, compared to 1.53% for selfies and 0.17% for videos.

“Biometric verification provides more protection against fraud than document verification alone —and a video selfie check provides superior protection over a photo selfie check,” said Sarah Munro, Director of Biometrics. “The video user experience in itself acts as a natural deterrent against fraud because it’s a highly randomized active experience. Given that video spoofs accounted for a fraction of all our video checks, this makes it an excellent security measure for businesses focused on making fraud prevention a priority.”

Methodology

The Onfido team of document fraud specialists processes millions of identity documents every year, helping over 800 clients detect fraud across 2,500 document types from 195 countries. The 2022 Identity Fraud Report shares the insights gained on the state of remote identity fraud over the past year, based on analysis of data collected from October 1, 2020 to October 1, 2021 and normalized by client and industry distribution.

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