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Identity fraud has always evolved in line with emerging technologies, yet AI’s generative qualities have accelerated the level of identity verification risks businesses now face. We’ve entered an era where AI is a modern frontier of identity fraud attack and defence.
Leveraging tools such as generative voice and image with vast amounts of preformed data means that fraudsters are now able to produce digital fake IDs en-masse at a rapid pace, while deepfake usage can launch sophisticated scams and bypass biometric verification.
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Identity verification specialists, the most trusted of which process tens of millions of IDs monthly, understand how pervasive the ID identity threat is for all manner of business, such as retail, automotive, cargo and shipping, and financial services. What’s worrying is that many businesses are yet to awaken to the threat of AI-enabled fraud techniques, much less how best-in-class verification providers are using the technology to fight back, increasing business safety and resilience as the threat landscape diversifies.
How Deepfakes are able to bypass digital systems
AI-enabled fraudulent identities threaten industries due to the accessibility, speed, scale, and flexibility in how they can be produced. Need a digital image fraudulent drivers license in a different state? AI can produce this change with just a few prompts. ID fraud had once required experts to forge different identities. Nowadays, digital tools are able to synthetically create false IDs en-masse, with a few clicks and a little know-how.
A 2024 report from IDScan.net analysed how consumer behaviour and purchase intent is being impacted by AI, finding that AI-generated fraud was the foremost threat; 78% of people cited concern about the prospective misuse of deepfake technologies, while 70% of consumers reported coming across such content more than once a week. Worryingly, only 44% thinking they can identify when a material is deep faked – it’s not hard to extrapolate similar identification gaps for unsuspecting employees, too.
There are cases where criminals use AI to mimic facial features in deepfake videos, which in turn enable them to bypass self-based ID checks. Other usage includes language processing and automatical fill-in of onboarding forms, imitating human behaviour. Equally, the growing rate of AI-generated ID images are purchased for as little as $5 and used to commit e-commerce fraud.
The gaps in verification systems
A lot of organisations still rely on KYC systems that aren’t necessary designed to withstand the capacities of modern AI. Traditional tasks like scanning documents often check for template consistency and placement of data. Now, AI-generated documents are able to replicate those details almost perfectly.
There are also other techniques, such as 2-D photo recognition being fooled by high-res images and videos. As a result, businesses are making onboarding decisions based on flawed data, unknowingly giving access to personal and organisational information.
The cost of protection is invaluable. Businesses face serious financial losses, including legal penalties for non-compliance, when these hackers are successful. As regulations become more stringent, especially in financial and age-restricted sectors, it’s vital to eliminate identity fraud or risk the loss of reputation and operational licenses.
Why technical advances are non-negotiable
As these technologies advance, our identification verification protection needs to evolve. AI has raised fraud concerns, but now it must be part of the solution. Today’s technology must be able to pick up on fraud. One of the most powerful tools of defence is near-field communication (NFC) scanning. This allows the embedded chip in biometric passports and national IDs, a level of verification that’s nearly impossible to fake.
Technologies that are able to verify processes like document authentication checks and biometric comparison, will help eradicate these issues. These added layers of protection helps us build a much stronger line of defence.
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Another recent IDScan report shows the results from testing over 200 AI-generated fake ID images, using digital ID verification software. Through image and symbology analysis alone, over 84% of the fake IDs were caught. When layered with third-party database checks, detection rose to 99.6%. These findings prove that while AI-generated IDs are a rising threat, purpose-built tools can still outsmart even the most sophisticated fakes.
However, relying on tools without education is a risk in itself. Too many organisations assume identity fraud is a problem exclusive to banks or large enterprises. Fraud is now a scalable business — and AI is making it easier for bad actors to mimic real identities with shocking accuracy.
To stay ahead, business leaders must invest not just in fit-for-purpose solutions, but in staff training and process consistency. Any gaps in onboarding, data handling, or suspicious upload behaviour create opportunities for attackers. Meanwhile, regulators need to keep pace. Compliance standards must evolve in step with the technology — or risk becoming irrelevant. Combating fraud at scale will require meaningful collaboration between government and business.
Looking into the future
While businesses require a greater understanding of the identity fraud threats they face, choosing the right verification provider is enough to mitigate significant portions of the risks involved. However, fraudster’s use of AI will only accelerate and, as the technology grows in sophistication, so too will fraud methods,
The tug of war between AI attackers and defenders is far from settled, yet we urge businesses to understand the risks they face, and make clear, strategic investments to quash the threat of physical and digital fraud, including those that rise as a result of evolving technologies.
The time to fix up defences is now, as fraudsters leverage AI, innovation in verification technology is beating them, enabling businesses to focus on growth and customer satisfaction, rather than fending off identity fraud in-store and online.
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