New Report: Identity fraud doubled in crypto and banking in 2022

Sumsub, a global verification platform providing customizable KYC, KYB, transaction monitoring, and AML solutions for the whole customer journey, today published its second annual Identity Fraud Report, that identifies fraud trends and statistics based on millions of identity checks across 21 industries and over 500,000 fraud cases between 2021-2022.

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New Report: Identity fraud doubled in crypto and banking in 2022 (Graphic: Business Wire)

Seven key findings from Sumsub’s Identity Fraud Report:

• 55.8% of all identity fraud occurs in 5 countries – with 5.1% in the USA alone
• E-sports has the highest fraud incidence with a 2.9% share of total cases
• Crypto and banking both experienced a nearly two-fold increase in identity fraud in 2022
• Payment fraud increased by 40% in 2022
• ID cards are the most commonly forged document type in 2022
• 79% of all forged documents used male personas in 2022
• Deepfakes are getting more advanced and growing in popularity

Countries and documents most vulnerable to fraud in 2022

In 2022, over half of all fraud cases happened in five countries: Bangladesh (22%), Pakistan (15.2%), Vietnam (8.1%), Nigeria (5.4%) and the USA (5.1%).

In 2022, ID cards have accounted for 8 out of the top 10 document types used for fraud. In 2021, Nigerian driving licenses were the most vulnerable to forgery (7.6% of them were forged), followed by Bangladesh and Pakistan ID cards. This year, the only driving license to make it to the top 10 is from the US.

Fraud trends in various industries

In 2021, the landscape was different, with payment and consulting targeted the most. In 2022, things changed: the payment industry no longer leads the chart, and consulting has dropped in popularity. Instead, fraudsters have begun targeting E-sports–a form of virtual multiplayer competition using video games–more frequently (2.9% of all fraud cases) due to the explosive growth of the industry over the past two years and relatively low onboarding barriers.

The Sumsub report also highlights an approximately twofold increase in fraud targeting the crypto industry—from 0.7% of all fraud cases to 1.5%. Likewise, banking has seen nearly 100% growth in fraud cases, while e-commerce has seen a thirteen-fold increase in the proportion of fraud (from 0.1% of all cases in 2021 to 1.3% in 2022).

Transaction fraud in 2022

Fraudsters are particularly keen on using stolen bank cards, chiefly targeting financial services, e-commerce, and gambling industries. 3.6% of all e-commerce revenue in 2022 has been stolen by fraudsters. Payment fraud grew 40% from 2021 to 2022, significantly increasing the share of this type of fraud worldwide. So it’s no wonder that 46% of payment merchants now prioritize the prevention of illegal chargebacks.

“As transaction fraud increases and evolves rapidly, the need to safeguard your business is higher than before, and the easiest way to do this is by implementing an advanced transaction monitoring and risk-management solution that cross-checks user KYC data and transaction information to prevent fraud – just like Sumsub’s KYT solution does,” – comments Vyacheslav Zholudev, Sumsub’s co-founder and CTO.

The most popular fraud schemes and behavioral trends

In 2022, the main fraud vectors are account takeovers (gaining illegitimate access to another person’s account), multi-accounting (registering more accounts than permitted), chargeback fraud (raising fake disputes with the bank) and biometric spoofing (using life-like masks, deepfakes, and other advanced methods).

Sumsub found that websites are getting attacked more often in 2022, while mobile apps attack vectors are not as popular. Still, the number of cases continues to grow both for mobile and web applications. As for the operating systems fraudsters target, this year Android extended its lead, seeing 0.4% more fraud than iOS, as opposed to a 0.1% difference in 2021.

Gender statistics on identity fraud suggest that male documents make up the majority of forgeries. This gap has widened even more in 2022, reaching 79% compared to 72% in 2021.

Tampered images out of fashion, advanced deepfakes on the rise

According to Sumsub’s analytics, fraudsters have developed more advanced deepfake technology that is exceptionally difficult to distinguish from reality. Fraudsters no longer rely on blatant attacks like printed images, phone screens, etc. Now, just about every attempt at bypassing verification is made with the help of carefully crafted deepfakes and fabricated IDs that require robust anti-fraud technology to detect.

Since fraud technology is advancing rapidly, pattern recognition is becoming a must-have in order to catch fraudsters early. This includes behavioral analysis which can indicate if a person spends too much time (or too little) on a check.

Predictions for 2023

Sumsub’s AI/ML experts see deepfakes as a growing threat that will continue in 2023. As image generation and AI technologies become more available, fraudsters will get more advanced. At the same time, businesses will have more tools at their disposal to prevent fraud.

“In 2023, we expect developing countries to lead the fraud charts due to the vulnerability of local documents. It is also likely that the crypto, trading, and e-commerce industries will take the biggest hit from criminals using advanced fraud tools. Staying up to date with the recent antifraud developments will be crucial for companies operating online. Sumsub will be looking carefully into the changing identity fraud landscape, and we update our product solutions accordingly to ensure 100% fraud protection for our global clients”, – says Vyacheslav Zholudev, Co-founder and CTO at Sumsub.

Sumsub’s annual identity fraud report for 2022 is available for download at this link: https://sumsub.com/fraud-report-2022/

Note on Sumsub’s research methodology

Sumsub research was performed between 2021 and 2022 with a focus on global fraud trends. The study is based on anonymous verification statistics on millions of users from 21 industries worldwide, with 500,000+ fraud cases studied, compared year-over-year between 2021 and 2022. All data is gathered from internal sources and supported by detailed analysis from the company’s AI/ML experts.

About Sumsub

Sumsub is an all-in-one verification platform that secures every step of the customer journey. With Sumsub’s customizable KYC, KYB, KYT and AML solutions, you can orchestrate your verification process, welcome more customers worldwide, speed up onboarding, reduce costs and steer clear of digital fraud. Sumsub achieves the highest conversion rates in the industry—91.64% in the U.S., 95.86% in the U.K. and 90.98% in Brazil—while verifying users in less than 50 seconds on average. Sumsub’s methodology follows FATF recommendations, the international standard for AML/CTF rules and local regulatory requirements (FINMA, FCA, CySEC, MAS, BaFin). As the first regulated compliance-as-a-service provider, Sumsub has a team of compliance experts ready to consult on regulatory specifics worldwide. With over 2,000 clients across the fintech, crypto, transportation, trading and gaming industries, Sumsub partners with the likes of Binance, Mercuryo, Bybit, Huobi, Unlimint, DiDi, Poppy and TransferGo.

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