Identity fraud has no respect for international or industry borders. It’s a constantly evolving, global issue impacting businesses across every industry and in every country around the world. More recently, the potentially devastating results of identity fraud have been highlighted by the increasingly sophisticated way fraudsters are operating. The power of AI and machine learning is now harnessed by criminals to launch widespread, complex attacks which means, despite the best efforts of those dedicated to fighting identity fraud, detection and prevention is more challenging than ever.

The growing threat landscape

For anyone concerned the scale of the threat is being overstated, the data is sobering. GBG’s own research this year shows an alarming increase in the sophistication of fraud attempts over the last 12 months. Almost a third of the fraud professionals we spoke to around the world said sophisticated fraud was a major threat to their businesses. Deepfakes, AI-generated videos, pictures and audio clips, and fake identity documents, are becoming increasingly convincing and hard to identify.

Ever the opportunists, criminals are exploiting this new technology for their benefit, creating highly convincing false identities, which are then reused across different industries to commit fraud at a dizzying scale.

This trend has obviously had a significant impact on organisations, but it is also hitting individuals hard. Employees have been scammed into transferring millions to fraudsters, lured into doing so by deep-fakes of CEOs and senior business leaders. No less pernicious is the spread of online misinformation, using deepfakes of celebrities, politicians and other public figures.

The maturing technology is obviously concerning, but the way in which it is being deployed is giving real cause for alarm. Fraud is big business, and the industrialisation of fraud is of huge concern across all industries and in every country.

Can fraudsters be stopped?

With the scale and scope of the challenge in mind, we can see how vital it is for businesses to build an accurate picture of all potential customers from their very first interaction, to decide whether or not they can be trusted.

Unfortunately, despite its potential to stop criminals early, too few organisations prioritise fraud detection at the account opening stage. The lion’s share of investment goes on activity during payment or withdrawal stages. This could leave an organisation dangerously exposed, highlighting the need for more robust onboarding processes that stop fraudsters from ever entering a business.

Collaboration is business critical 

The question is, even if businesses do redouble their efforts to catch criminals during their very first interaction, how can they improve on fraud detection?

The industrialisation of fraud calls for a truly joined up solution and collaboration is going to be key when it comes to putting a stop to its devastating impact. Identity intelligence consortiums, which connect transactions taking place around the world and share international consumer intelligence between businesses, are growing in popularity as increasing numbers of organisations realise the value of knowledge and data sharing.

Sadly, our research reveals that while businesses see the benefit of working alongside others to combat fraud, concerns around data privacy and potential loss of competitive advantage is preventing them from collaborating. If businesses are not part of such a group, they risk losing out because they will not benefit from the early insights that can pre-empt crime detection and stop fraudsters before ever entering a business.

Organisations across all industries must overcome their reluctance to share identity intelligence to fight fraudsters. Sharing consumer intelligence to combat fraud does not mean a business will lose its competitive advantage – this is a dangerous myth. The fact is that businesses do not share raw data within consortia, but anonymised patterns and insights on confirmed or suspicious fraud. This has a huge benefit for all businesses – regardless of sector or location. Afterall, criminals don’t limit fraud attacks to one business, industry or stop at national boundaries either.

A competitive differentiator

Intelligence sharing empowers businesses to apply friction where necessary, stopping fraudsters in their tracks at the earliest opportunity. Significantly, it can also be a strategic differentiator in beating fraud, allowing businesses to recognise good customers and in turn ensure an exceptional user experience. With anonymised data and insights, this can be achieved without sacrificing data privacy or a competitive advantage. It’s a win-win situation.

Companies are already working together to achieve a new commonly held objective: building trust in digital identities, and more collaboration brings more power in the fight against fraud. Building trust will increasingly be a common concern and a collective endeavour for brands that rely on identity confidence to do business. Organisations shouldn’t wait for regulation to take this step but understand the value it can bring now and act. There is no time to waste.

By developing a data-sharing network between industries all businesses can benefit from real-time fraud intelligence and start to build up a global view of digital identities that will become increasingly valuable in the battle against fraud.