Identity fraud sees sharp rise during COVID-19 pandemic

Rate of identity fraud increases 41 percent – INTERPOL contributes to benchmark report; links ID fraud to “organised crime, money laundering and terrorism”

Posted 8 December 2020 by Christine Horton

Identity fraud has surged during the COVID-19 pandemic, according to new research.

Onfido’s Identity Fraud Report 2020 released today shows identity document (ID) fraud rate increased by 41 percent over the past 12 months. It notes that first-time fraudsters appear to be more prevalent, likely due to increased economic hardships during the pandemic.

The average ID fraud rate reached 5.8 percent – up from 4.1 percent the previous year (Oct 2018-2019).

Commenting on the findings, international criminal police organisation INTERPOL said: “Identity document fraud can take different forms, and both false and genuine documents are used to perpetrate a variety of frauds. The fraudulent use of identity and travel documents therefore presents a threat to the security of countries and their citizens, the economy, and global commerce, and is often linked to organized crime, money laundering and terrorism. Onfido’s Fraud Index addresses specific topics and includes real-life statistics based on their work to uncover deception before it leads to criminal activity.”

Fraudulent activity peaked in July and August. But with large parts of Europe encountering a ‘second wave’ and re-entering lockdown, coupled with the spike in online activity for the holiday shopping season, Onfido predicts fraud rates will start to climb again in the last few months of the year.

The explosion in ID fraud since the beginning of the pandemic has also given rise to a number of new trends for identity fraud:

Fraud is becoming the new ‘side hustle’

Fraudulent activity tends to increase during crises as the three primary factors of fraud are intensified: opportunity, rationalisation and pressure. This year, the proportion of unsophisticated fraud grew 23 percent year-over-year, from 57 percent in 2019’s Fraud Report to 70 percent. Given that the amount of sophisticated attacks stayed the same, at under 1 percent, this suggests that first-time fraudsters might be trying unsophisticated attacks as a new side hustle outside of their regular work to shield them from the economic downturn.

ID Fraud is no longer just a 9-5 job

In 2019, Onfido identified that many fraudsters treated it as a 9-5 job: attacks were higher on weekdays and dropped off over the weekends. This year, that has changed. Now, the suspected fraud rate is staying almost level over all seven days of the week. Professional fraudsters appear to be working overtime with the activity level at these times further bolstered by the growing ‘talent pool’ of non-professionals. 

Emerging trends in biometric fraud

In 2020, Onfido has identified a growing use of 2D and even 3D masks to attack both its selfie and video verification products. There has also been an increase in replay attacks, where fraudsters attempt to circumvent cameras entirely and upload stolen videos or deep fakes. This was the first year Onfido saw deep fakes used; a tactic likely to quickly grow in popularity as they are cheaper to create than good 3D masks.

Suspicious behaviour now harder to detect

Many legitimate individuals’ purchasing habits have dramatically changed as a result of the pandemic, which has rendered suspicious behaviour even harder to spot. Businesses across all industries need to be extra-vigilant and recalibrate their friendly friction threshold – the difficult balance between fraud risk and customer experience. 

“There is no question that COVID-19 has catalysed massive growth in identity fraud attempts, with industries like financial services disproportionately affected,” said Michael Van Gestel, Head of Global Document Fraud at Onfido. 

“And with sensitive and personally identifiable information easily gleaned from social media and available for sale on the dark web, database checks are just not fit for purpose in this escalated fraud environment. Baking in more sophisticated identity verification methods, such as document and biometric authentication, will ensure that no matter how fraudsters try to capitalise on the changing situation, businesses can significantly lower the risk of fraud to their organization and customers.”