In the United States, legislators have started building legal bulwarks against the encroaching tide of data exploitation. While the US has long been regarded as a patchwork of sectoral privacy laws, recent years have witnessed a significant shift towards comprehensive consumer data protection. This transformation reflects a growing recognition of the need for robust regulations to address the complexities of modern data practices.

While the elusive federal-level consumer data protection act remains a tantalizing mirage on the horizon, individual states have taken the reins, crafting their own legislative masterpieces to fill the void. Consequently, a diverse array of state privacy laws has emerged, each aiming to enhance privacy protections and empower consumers in an increasingly data-driven society.

For both businesses and consumers, understanding the complexities of these laws can be challenging. This article aims to clarify the key aspects of US data protection and privacy laws.

1. Overview of US privacy landscape

For years, data protection in the United States relied on the sectoral approach. This meant that data privacy regulations in the US applied only to specific industries. There was (and still is) the Health Insurance Portability and Accountability Act (HIPAA) to regulate the processing of protected health information by covered entities and business associates. In the financial services industry, consumers received some privacy protection under the Fair Credit Reporting Act (FCRA) or the Gramm-Leach-Bliley Act (GLBA). Additionally, laws like the Maryland Online Privacy Protection Act (COPPA) regulate data collection for children, while others address biometric data and personal identifiers. However, none of these laws provide comprehensive protection to the individual.

Recently, data protection in the US took an interesting turn. In 2018, the California Consumer Privacy Act (CCPA) was signed into law. It became effective on January 1, 2020, and it was the first comprehensive data privacy law in the United States. It gives consumers far more control over their personal information than any of the previous privacy laws. The CCPA, along with its amendment, the California Privacy Rights Act (CPRA), protects consumers on another level, setting an example for other states. Suddenly, consumers could ask about what personal data is being collected about them, receive information about data disclosures, say “no” to the sale of their personal data, or even request that their personal information be deleted, regardless of the industry of the business.

It took a while for other states to follow suit. But today, though California remains by far the most stringent of the state data protection laws, there are several state-level data protection and privacy laws granting similarly broad protection to consumers in other states as well.

In 2025 there was no such ambitious project as the American Privacy Rights Act of 2024 or the American Data Privacy and Protection Act of 2023 (neither of which passed the early discussion phase). Only time will tell whether someday there will also be a “United States General Data Protection Regulation” (yes, a straightforward, clumsy comparison with the European GDPR).

Meanwhile, let’s dive into the overview of the data protection and privacy laws enacted by various US states.

2.  In-depth look into the US states’ data protection and privacy laws

It’s essential to recognize that the US privacy landscape is in constant change. Therefore, we cannot promise an exhaustive overview of all state-level consumer data protection acts. However, we have curated a list of the most relevant legal acts shaping the privacy landscape in 2025. Here’s a look at the key provisions of US data protection and privacy laws, including new states entering the fold:

California

• Act: California Consumer Privacy Act of 2018 (CCPA) and its amendment, the California Privacy Rights Act (CPRA)
  

• Effective Date: January 1, 2023 (for CPRA amendments)
  

• Scope: Protects individuals both in private household context as well as in a commercial or employment context. It imposes obligations on businesses and service providers
  

• Unique Features: In addition to the Attorney General, it is enforced by the California Privacy Protection Agency (CPPA) and includes even a private right of action for certain security breaches
  

Stay Secure

Learn more about Veriff’s state-of-the-art security practices and how we ensure your data remains secure at all times.

Talk to us

Colorado

• Act: Colorado Privacy Act (CPA)

• Effective Date: July 1, 2023

• Scope: Protects individuals acting in private household context. Imposes obligations on controllers and processors

• Unique Features: Has been amended several times since it first entered into force to enhance protection of biometric data and sensitive data (latest amendments in July 1, 2025)

Connecticut

• Act: Connecticut Data Privacy Act (CTDPA)

• Effective Date: July 1, 2023

• Scope: Protects individuals acting in private household context. Imposes obligations on controllers and processors

• Scope: Protects individuals acting in private household context. Imposes obligations on controllers and processors
  

Delaware

• Act: Delaware Personal Data Privacy Act (DPDPA)
  

• Effective Date: January 1, 2025

• Scope: Protects individuals acting in private household context. Imposes obligations on controllers and processors. Applies to businesses processing data of at least 35,000 Delaware residents, or 10,000 residents if deriving over 20% of revenue from data sales

• Unique Features: Universal opt-out mechanisms must be implemented by 2026
  

Iowa

• Act: Iowa Consumer Data Protection Act (ICDPA)\
  
  
• Effective Date: January 1, 2025
  
  
• Scope: Protects individuals acting in private household context. Imposes obligations on controllers and processors. Targets businesses processing data of 100,000 consumers, or 25,000 consumers with over 50% of revenue from data sales
  
  
• Unique Features: Unlike several other US State Privacy Laws, the ICDPA does not include obligation to carry out data protection assessments
  

Nebraska

• Act: Nebraska Data Privacy Act (NDPA)

• Effective Date: January 1, 2025

• Scope: Closely mirrors the Virginia model, applying to businesses handling data of 100,000 consumers or 25,000 consumers if deriving over 50% of revenue from data sales

• Unique Features: Emphasizes transparency and consumer rights to access, delete, and correct personal data
  
  

New Hampshire

• Act: New Hampshire Data Privacy Act (NHDPA)

• Effective Date: January 1, 2025

• Scope: Applies to businesses processing data of 100,000 consumers, or 25,000 consumers with over 25% of revenue from data sales

• Unique Features: Aligns closely with Connecticut’s framework, including opt-out provisions and detailed definitions for sensitive data. Also, there is already an amendment proposal in the works.
  

New Jersey

• Act: New Jersey Data Privacy Act (NJDPA)

• Effective Date: January 15, 2025

• Scope: Applies to controllers processing data of 100,000 consumers, or 25,000 consumers if deriving revenue from data sales

• Unique Features: Focuses on consumer rights to correction and deletion, and prohibits discrimination for exercising privacy rights
  
  

Maryland

• Act: Maryland Online Data Privacy Act (MODPA)
  
• Effective Date: October 1, 2025

• Scope: One of the most comprehensive laws enacted in 2024, focusing on data minimization and protections for sensitive data categories

• Unique Features: MODPA is much stricter on sensitive data processing. For example, the sale of any sensitive data is prohibited, regardless of consent. Furthermore, even for service or product provision, controllers may not collect, process, or share sensitive data unless it is strictly necessary.
  

Minnesota

• Act: Minnesota Consumer Data Privacy Act (MCDPA)

• Effective Date: July 31, 2025

• Scope: Covers entities processing data of 100,000 consumers, or 25,000 consumers deriving over 25% of revenue from data sales

• Unique Features: Strong opt-out rights and mandatory privacy impact assessments

Montana

• Act: Montana Consumer Data Privacy Act (MCDPA)

• Effective Date: October 1, 2024

• Scope: Protects individuals acting in private household context. Imposes obligations on controllers and processors

• Unique Features: For data to be deidentified, MCDPA explicitly states that the data cannot be reasonably linked to a device linked to the individual.

Oregon

• Act: Oregon Consumer Privacy Act (OCPA)

• Effective Date: July 1, 2024

• Scope: Protects individuals acting in private household context. Imposes obligations on controllers and processors

• Unique Features: Similarly to CCPA, OCPA includes household data in personal data definition. It was amended in June 2025 addressing the sale of personal data. Obligation to honour opt-out requests is applicable from January 2026
  

Tennessee

• Act: Tennessee Information Protection Act (TIPA)
  

• Effective Date: July 1, 2025
  

• Scope: Applies to businesses processing data of 175,000 consumers, or 25,000 consumers with over 50% of revenue from data sales
  

• Unique Features: Provides an affirmative defense for businesses following the NIST Privacy Framework

Utah

• Act: Utah Consumer Privacy Act (UCPA)
  

• Effective Date: December 31, 2023
  

• Scope: Protects individuals acting in private household context. Imposes obligations on controllers and processors
  

• Unique Features: Consumer rights are much more limited than under other US State Privacy laws. Several rights such as the right to correct data or the right to object to automated decision making are not included.

Texas

• Act: Texas Data Privacy and Security Act (TDPSA)
  

• Effective Date: July 1, 2024
  

• Scope: Protects individuals acting in private household context. Imposes obligations on controllers and processors

Virginia

• Act: Virginia Consumer Data Protection Act (VCDPA)

• Effective date: January 1, 2023
  

• Scope: Protects individuals acting in private household context. Imposes obligations on controllers and processors

Florida

• Act: Florida Digital Bill of Rights (FDBR)
  

• Effective Date: July 1, 2024
  

• Scope: FDBR is somewhat special compared to other US data protection and privacy laws. It focuses more on the protection of personal data of children and issues of social media. The main target of the law are big tech companies

3. Actionable insight: tips to keep your business compliant

• Privacy compliance is a journey: Regularly assess your compliance status and stay updated on federal laws and state privacy laws.

• Transparency is key: Honor opt-outs and ensure consumers know how their personal information is processed.

• Train your team: Equip your staff with knowledge about data protection trends and privacy laws.

4. How Veriff can help? 

Veriff assists customers in navigating the complex terrain of regulatory and compliance obligations with cutting-edge identity verification technology. In industries where knowing your customer (KYC) and anti-money laundering (AML) regulations are stringent, Veriff’s solutions streamline the verification process, ensuring that businesses can remain compliant with local and international laws. By employing advanced AI and machine learning algorithms, Veriff automatically verifies the authenticity of documents and the identity of users, reducing the risk of fraud. This not only fortifies trust and safety online but also significantly diminishes the legal and financial repercussions associated with non-compliance.

Veriff’s Services are flexible to align with various privacy laws (including the US State Privacy Laws) to assist the customer with any data protection related matters.

Please note that Veriff does not provide legal advice. This article is provided for informational purposes only. You should always discuss your privacy and data protection operations or issues with a qualified legal counsel or privacy specialists.

The post Ultimate guide to US Data Privacy Protection Laws: Stay secure with Veriff appeared first on Veriff.

Fraud is evolving faster than ever—and it’s being supercharged by AI. In 2025, account takeover (ATO) fraud has become more pervasive and sophisticated, driven by generative AI tools that enable fraudsters to convincingly mimic real users. These actors are no longer just exploiting weak passwords—they’re bypassing traditional authentication systems, hijacking identities with alarming ease, and slipping through outdated security measures. As the fraud landscape continues to transform, organizations must respond with smarter, more adaptive technologies capable of identifying and stopping threats in real time.

The growing threat landscape

According to Veriff’s 2025 Identity Fraud Report, fraud attempts surged by 21% in the past year alone, with AI-powered scams emerging as a top concern. Alarmingly, 78% of U.S. decision-makers reported a notable rise in AI-driven fraud, highlighting the urgent need for next-generation protection strategies.

Veriff is meeting this challenge head-on with a robust and customizable identity verification (IDV) ecosystem, designed to tackle fraud across every stage of the user journey—from onboarding to authentication and account recovery.

Download the Veriff Identity Fraud Report 2025

Uncover the Future of Identity FraudExplore the key trends, threats, and technologies shaping the global fight against identity fraud in 2025.

Get the report

Veriff’s advanced Biometric Authentication: A user-centric security layer

To combat ATO fraud while maintaining a seamless user experience, Veriff has significantly upgraded its biometric authentication capabilities. These enhancements focus on real-time adaptability, fraud intelligence, and behavioral understanding, moving beyond traditional session-based verification.

Key features include:

• Liveness Detection: Accurately detects whether the user is physically present, preventing deepfake and spoofing attempts.
  
• Anti-spoofing technology: Thwarts manipulation using printed photos, masks, or replay attacks.
  
• High-resolution facial matching: Offers superior match rates with improved accuracy, reducing false positives and verification drop-offs.
  
• Behavioral adaptation: Aligns verification with user-specific behavior patterns, moving toward a persistent digital identity that ensures secure reuse across platforms.
  

By enabling authentication for the user, not just for the moment, Veriff’s solution creates a more resilient defense against AI-driven fraud while enhancing usability.

Geo Jolly Lead Product Manager

Veriff’s end-to-end fraud prevention ecosystem

Veriff doesn’t just stop at identity checks. Its Fraud Protect and Fraud Intelligence products work in concert with IDV and Biometric Authentication to offer an adaptive, risk-based approach to fraud prevention.

Key capabilities include:

• Machine-Learning Powered Checks: Real-time analysis of behavior and visual cues to block evolving fraud tactics.
  
• Risk Labels & FaceBlock: Tools that help identify high-risk sessions and automate mitigation strategies.
  
• CrossLinks: Uncovers connections between fraudulent attempts across different identities or devices.
  

These features allow Veriff to continuously evolve fraud defenses while keeping false positives low—ensuring that more genuine users are approved and fraudsters are stopped in their tracks.

Future-proofing against ATO: Veriff’s strategic vision

As regulatory demands and fraud sophistication both rise, businesses must embed IDV, age assurance, and fraud detection as core pillars of their security stack. Veriff’s unified product suite offers:

• High conversion rates with a 6-second average processing time
  
• Global document coverage across 230+ countries
  
• Flexible SDKs and APIs to support mobile, web, and desktop use cases
  
• Seamless scalability to support business growth across regulated and unregulated industries
  

From KYC and AML compliance to user authentication and fraud mitigation, Veriff enables organizations to operate securely and grow confidently.

Final thoughts: A single, smart, scalable solution

Account takeover fraud is not just a cybersecurity issue—it’s a trust issue. With AI raising the stakes, Veriff offers an end-to-end verification and authentication platform that is smart, scalable, and user-first. By consolidating everything from identity checks to age estimation and behavioral biometrics into one cohesive system, Veriff empowers businesses to defend against fraud without compromising user experience.

In the age of AI-driven crime, Veriff is more than a gatekeeper—it’s your digital trust partner.

The post Reinventing account protection: Combating AI-driven ATO fraud with Veriff appeared first on Veriff.

Fraud is escalating rapidly, and fraud teams across industries are under increasing pressure to keep up. 

Veriff’s 2025 US Fraud Industry Pulse Survey captures the latest fraud trends, their impact on organizations, and the actions industry leaders are taking to combat them.

We spoke to 200 fraud experts and decision-makers across industries like financial services, technology, and e-commerce to bring you exclusive insights on everything from fraud prevention to seamless customer onboarding.

As part of our global survey, featuring perspectives from countries like the UK and Brazil, this report zooms in on the US while uncovering global trends shaping online businesses everywhere.

Here’s what you’ll discover:

1. Fraud incidents are surging—especially in digital-first industries

Nearly 72% of respondents reported a year-over-year increase in fraud, with fintech and crypto seeing the sharpest rise. Fraudsters are exploiting digital vulnerabilities as more services move online.

This trend is being observed worldwide. Similar findings emerged in other regions covered in this year’s global report, with 72.5% of UK respondents and 70% of those in Brazil also reporting a rise in online fraud. It’s evident that fraud professionals in the US and around the world are dealing with a growing global threat.

Key takeaway:

Fraud prevention isn’t just a compliance requirement—it’s a business-critical function that safeguards revenue and brand trust.

2. AI-driven fraud is the new battleground

AI is being applied in various ways by US. fraud professionals to combat fraud. The most common application is detecting fraud patterns and identifying potential risk factors (51.5%). However, many also rely on AI to streamline customer verification (43%), quickly uncover complex fraud schemes (38%), and monitor customer behavior over time to flag anomalies (32.5%). Notably, US professionals appear to leverage AI more broadly than those in other countries. In fact, 41.5% of US  respondents reported using AI across all these areas, compared to just 23.5% in the UK and 26% in Brazil—highlighting the more widespread adoption of AI tools in the US  fraud prevention landscape.

Industry response:

Companies are investing in AI-powered identity verification (IDV), biometric authentication, and deepfake detection to combat these advanced fraud tactics.

Artificial intelligence is proving to be a powerful tool in the fight against fraud, supporting organizations in multiple ways. The most common application is identifying fraud patterns and potential risk factors, with over half of respondents highlighting this benefit. AI is also widely used to automate customer verification processes, enabling more thorough and efficient checks. Additionally, organizations use AI to speed up the detection of sophisticated fraud schemes and to analyze customer behavior over time, helping to flag unusual or suspicious activity. Notably, a large portion of respondents—over 40%—reported using AI for all these purposes, underscoring its value as a comprehensive fraud prevention solution.

Download the Fraud Industry Pulse Report 2025

Discover the latest fraud trends shaping the U.S. market and what businesses are doing to fight back. Get actionable insights, expert predictions, and strategies to safeguard your organization.

Get the report

3. The persistent and adaptive nature of online fraud

Online fraudsters are both resourceful and adaptable, posing a wide variety of threats to businesses. This report highlights the diverse nature of these risks, with similar percentages of respondents identifying authorized fraud (41%), impersonation fraud (44%), document fraud (38%), and malware (46%) as key concerns.

These threats were also the top four in last year’s report, underscoring their persistence. However, the continued prevalence of account takeover (21%), third-party coercion (17%), and multi-accounting (14%)—aligning with the findings of our 2025 Fraud Report—demonstrates that criminals will exploit any opportunity to steal from businesses. To counter these evolving threats, fraud professionals must implement the strongest possible defenses.

Actionable step:

Businesses must enhance Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols with multi-layered verification solutions.

There could be a range of dangers ahead: it is vital that firms build their security posture on technology that can evolve to meet evolving threats,

Irya Bondar Fraud Platform Lead

4. Customers expect more from fraud protection

Fraud isn’t just a business issue—it’s a customer trust issue. 71.5% of respondents said their customers now expect robust fraud prevention measures. Businesses that don’t meet these expectations risk losing customers to competitors who do.

This underscores a continuing trend from last year, when 86% of US decision-makers recognized it as a top customer demand. The shift isn’t limited to the US—our most recent global survey shows that 79.5% of fraud professionals in Brazil and 71% in the UK are seeing similar increases in customer expectations. The message is clear: companies that fail to safeguard their customers against online fraud risk losing their trust, while those that prioritize security can turn it into a competitive edge.

5. Investment in fraud prevention is increasing

There’s good news: organizations are taking fraud seriously.

76% of fraud and compliance leaders plan to increase their fraud prevention budgets in the next 12 months. 

Top investment areas include:

• AI-powered identity verification
• Device fingerprinting for behavioral tracking
• Ongoing user monitoring to detect anomalies
• Fraud Intelligence solutions leveraging real-time data analytics

Fraud professionals in the US. are increasingly adopting IDV and biometrics, with usage expected to rise even further. According to our survey, 81% of respondents intend to rely more on these technologies in the next year, reflecting both the security benefits they’ve already observed and their confidence in future advantages.

This trend continues the steady growth seen in previous years and is not limited to the US.—it’s a global shift. In the UK, 78.5% of respondents plan to expand their use of IDV and biometrics, while in Brazil, the figure reaches 85%.

6. Why identity verification is a critical fraud-fighting tool

Fraud prevention starts with verifying identities with confidence. Organizations need a seamless, AI-driven identity verification process that ensures:

• Frictionless customer onboarding without compromising security
• Protection against identity theft, account takeovers, and synthetic fraud
• Compliance with evolving regulations like KYC and AML

Veriff’s global-first identity verification solutions integrate biometric authentication, liveness detection, and AI-driven fraud prevention to help businesses detect and prevent fraudulent activities at scale.

Emerging trend:

Insights from Gartner and industry analysts indicate a shift towards fully integrated fraud prevention solutions. By 2029, over 50% of vendors will consolidate fraud detection, ID verification, and AML monitoring into unified platforms (FRAML solutions). This shift aligns with fraud teams’ increasing need for automation and risk intelligence.

Additionally, regulatory pressure is increasing, especially in high-risk industries. The move towards biometric-based identity verification is evident in regions like Brazil and Mexico, where government initiatives are promoting liveness detection and facial biometrics for fraud prevention (Market Insights: LATAM 2025).

7. How Veriff empowers fraud teams

Fraud teams need more than just tools—they need scalable, AI-powered solutions that integrate seamlessly into their workflows.

Veriff’s fraud prevention solutions include:

Veriff’s Fraud Protect solution offers businesses a powerful, AI-driven toolkit to detect and prevent fraud at scale. By combining machine learning checks, fraud network analysis, and in-house counter-fraud expertise, Veriff helps organizations identify suspicious activity and safeguard genuine users. The solution includes tools like DocCheck to flag physical or digital document tampering, DeviceCheck to assess risk based on device signals, and FaceBlock to block known or suspected fraudsters. FaceCheck and FaceCheck Liveness add biometric scrutiny to ensure users are real and present—not manipulated or generated. Meanwhile, CrossLinks and RiskScore provide a broader view of fraud risk, including emerging threats like deepfakes. Together, these features empower fraud teams to act with confidence, reduce false positives, and stop sophisticated fraud before it impacts the business.

8. Driving growth and trust: How Veriff helped Legitify scale securely and seamlessly

By partnering with Veriff, Legitify was able to streamline its notarization process through seamless and secure identity verification. Veriff’s innovative IDV technology not only ensured compliance with regulatory requirements across multiple jurisdictions but also significantly enhanced user trust and platform security. With Veriff’s real-time verification and fraud prevention capabilities, Legitify reduced onboarding friction, improved the overall customer experience, and accelerated its international expansion. This strategic partnership played a crucial role in Legitify’s continued growth and success in the digital notarization space.

The post US fraud trends 2025: Exploring insights from Veriff’s Industry Pulse Survey appeared first on Veriff.

Identity fraud and identity theft pose severe consequences for individuals and organizations around the globe. According to the US Department of Justice, the two terms are “used to refer to all types of crime in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain”.

While identity theft and identity fraud are closely linked, there are important distinctions. Identity theft refers to the unauthorized acquisition of personal information, such as someone’s name, Social Security number, or credit card details, without their consent. The victim doesn’t even need to be alive – crooks will happily steal the details of the deceased.

Identity fraud encompasses a broader spectrum of crimes that go beyond simple information theft. It involves using stolen details to commit financial fraud or other illicit activities by impersonating the victim or fabricating a false identity. In fact, the identity can be totally fictitious as well. This fictitious identity may not resemble an actual person but is crafted with realistic personal details.

2. What are the signs of identity fraud?

If you’ve become a victim of identity fraud, you’ll likely notice that:

• There’s suspicious activity on your credit card and bank statements
• There’s something inaccurate on your credit report
• Unfamiliar devices have gained access to your online accounts
• You can no longer access your online accounts
• You’re receiving suspicious phone calls, voicemails, texts, or emails
• You’re receiving unexpected mail or some of your expected mail is missing
• Your personal documents have been lost or stolen

As a victim of identity theft, it is essential to keep detailed logs of all communications, place fraud alerts on your credit reports, file police reports, and work closely with financial institutions to resolve any fraudulent activities.

If you notice any of these signs, contact the fraud department of your financial institutions and file an identity theft report to address issues with financial institutions and law enforcement.

It’s a scary situation, but there are ways that customers can keep their information safe and prevent identity theft. For example, they should refuse to share personal information on social media; choose complex and unique passwords for each online account; and be careful on public wi-fi or securing their home wi-fi.

It’s vital, of course, to protect your personal information. But businesses – especially financial institutions – bear a key responsibility to deter fraudsters.

3. Types of identity theft

Identity theft and fraud can manifest in numerous ways, each posing unique challenges and risks. Understanding these various forms is crucial for both individuals and businesses to protect themselves effectively.

Credit card fraud: This involves using stolen credit card information to make unauthorized purchases or withdraw funds from a victim’s bank account. Credit card fraud is one of the most common types of identity theft.

Account takeover fraud: Identity thieves use stolen personal information to hijack bank accounts, credit cards, cellular phone services, and even email or social media accounts. This can lead to significant financial losses and privacy breaches.

Online shopping fraud:

This type of fraud involves using stolen card numbers, expiration dates, and security codes to make unauthorized online purchases.

Tax identity theft: This occurs when a stolen Social Security number is used to file a tax return in someone else’s name, stealing their refund. Victims of tax-related identity theft should report the issue to the IRS and complete Form 14039, the Identity Theft Affidavit.

Biometric identity theft: Hijacking security measures such as facial recognition and fingerprint recognition to gain unauthorized access to accounts or devices.

Synthetic identity theft: Creating a new, false identity by combining stolen information from one victim with other real or invented information.

4. Regional identity fraud insights 

United States

Understanding these types of identity theft can help businesses and individuals take proactive steps to protect their sensitive information and prevent fraud.

The data on identity theft complaints in the United States for 2022 highlights the alarming prevalence and diverse nature of identity theft crimes. According to the Federal Trade Commission, the most reported type of identity theft was credit card fraud, with 441,822 complaints, underscoring the growing vulnerability of financial systems to fraudulent activities. Following this, 326,590 cases fell under “other identity theft,” indicating a broad spectrum of illicit activities not confined to traditional categories. Bank fraud and loan or lease fraud also represented significant portions, with 156,099 and 153,547 complaints respectively, showcasing how financial institutions remain key targets. Employment or tax-related fraud, with 103,402 complaints, highlights the exploitation of sensitive personal data, while phone or utilities fraud and government benefits fraud, at 77,284 and 57,877 complaints respectively, reveal the extent to which identity theft impacts everyday services and essential aid. This data underscores the critical need for robust identity verification and fraud prevention measures to protect individuals and businesses from these pervasive threats.

United Kingdom

In the United Kingdom, identity fraud has emerged as a significant and escalating threat, with recent data revealing concerning trends. According to Cifas, the UK’s leading fraud prevention service, Identity fraud remains the most reported case type, accounting for 59% of filings to the National Fraud Database (NFD) in the first six months of 2024. There has been a 4% increase compared to 2023, driven primarily by impersonations related to mobile phone products (up by 102%) and personal current accounts (up by 19%)​. Fraudsters are employing sophisticated social engineering techniques, including researching LinkedIn profiles to impersonate financial institution employees. The use of synthetic identities is also on the rise, with attackers investing significant time in building fake profiles to access financial products. 

These findings underscore the importance of robust identity verification measures, greater consumer education, and investment in advanced fraud detection technologies to combat the sophisticated and growing threat of identity fraud in the US and the UK. Businesses must adapt to these emerging challenges to protect their assets, customers, and reputations.

Veriff Identity Fraud Report 2025

Our 2025 report shares the insights our expert fraud team has discovered on the front line of fighting fraud — giving you the tools to protect your business and keep you ahead of the fraudsters. Just fill out the form to receive your copy!

Get the report

5. How can businesses prevent identity fraud?

Identity theft is a significant concern for Chief Compliance Officers, Heads of Fraud, and IT Security Leaders, as it directly impacts their ability to protect assets, maintain compliance, and retain customer trust. Fraudsters’ evolving tactics pose risks such as financial losses, reputational damage, and regulatory penalties. This makes it essential for these professionals to safeguard sensitive data, meet stringent regulatory requirements, and mitigate fraud-related risks. Failure to protect information or comply with Know Your Customer (KYC) regulations can lead to severe fines, legal consequences, and loss of customer confidence. Additionally, businesses should encourage customers to place fraud alerts on their credit reports to prevent identity theft. Beyond financial losses, ensuring security can irreparably damage a business’s reputation, with long-term consequences for trust and operational success.

Employee education and awareness

Employee education and awareness are critical components in the fight against identity theft and fraud. By educating employees, businesses can significantly reduce the risk of data breaches and other security incidents.

• Types of identity theft: Employees should understand the different types of identity theft and fraud, including credit card fraud, account takeover fraud, and tax identity theft.
• Warning signs: Recognizing the warning signs of identity theft, such as unexplained charges or collections notices, can help employees take swift action to mitigate damage.
• Prevention methods: Educating employees on how to prevent identity theft is essential. This includes using strong passwords, monitoring credit reports, and being cautious with personal information.
• Reporting procedures: Employees should know how to report identity theft, including contacting the Federal Trade Commission (FTC) and filing a police report. Clear reporting procedures can help contain and address incidents quickly.
• Company policies: Understanding company policies and procedures for preventing and responding to identity theft is crucial. This ensures a consistent and effective approach to security.
• Best practices: Following best practices for protecting sensitive information, such as using encryption and secure networks, can help prevent data breaches and other security incidents.

By prioritizing employee education and awareness, companies can create a culture of security that protects both their business and their customers’ sensitive information.

6. How does identity verification help prevent identity theft?

How can businesses effectively combat fraud? Identity verification (IDV) solutions are a powerful ally, enabling swift and accurate detection of fake IDs, verification of document authenticity, biometric authentication, and mitigating velocity attacks. These tools reduce the likelihood of fraudsters gaining access to accounts or services.

This may sound complex, but it doesn’t need to be. Simplifying the identity verification process can enhance the user experience while ensuring stringent security measures. IDV software can make the process swift, efficient, and accurate.

With the help of IDV software, you can:

• Detect fake and tampered IDs
• Extract and verify document data
• Make it easy for users to prove their fake identity

Victims of identity theft should also report the crime to their local police department to officially document it. This is necessary for disputing fraudulent accounts and debts, and obtaining necessary documentation to protect their credit.

7. The Veriff approach

Veriff’s IDV solution is built on AI-powered automation and deep domain expertise. Our extensive document coverage supports more than 12,000 identity documents in over 230 countries and territories. To prevent fraud, Veriff uses machine learning-powered checks, advanced fraud network mitigation strategies, and our team of trained experts to help protect your organization against fraud.

Veriff advises contacting fraud departments from major credit reporting agencies to ensure that credit reports are properly flagged.

We are committed to fighting identity fraud. Our recent work provides enhanced detection techniques, comprehensive compliance solutions, and user-friendly identity verification. For example:

• Our Fraud Protect package helps mitigate the threat of impersonation, synthetic identities, and identity document fraud, among other dangers. We use CrossLinks to uncover fraud patterns and provide access to our trained fraud experts
• The Fraud Intelligence offering expands this offering, offering a RiskScore to determine the risk associated with an IDV session, among other tools
• We take a holistic approach. For example, our efforts to educate the public and their customers through the Fraud Education Center, alongside real-time intelligence and tailored solutions, demonstrate a holistic approach to combating fraud

These efforts are rooted in expertise and continuous innovation. The collective work of Veriff’s fraud prevention team reflects a commitment to excellence and adaptability in the face of evolving digital threats.

If your business would like to know more about how to prevent identity fraud and the steps it can take to stop bad actors from accessing its services, book a consultation with Veriff today. We’ll explain exactly how we can help you keep your businesses and customers safe.

The case study of Comun, a digital banking platform serving immigrant communities in the United States, highlights the transformative impact of Veriff’s identity verification solutions. Comun faced significant challenges with identity theft, particularly fraudulent attempts to open accounts using stolen Social Security numbers. By integrating Veriff’s advanced verification technology, Comun successfully mitigated these risks, safeguarding its platform and ensuring compliance with regulatory requirements. This partnership not only enhanced security but also streamlined the onboarding process for legitimate customers, fostering trust and accessibility.

For Veriff, the collaboration with Comun underscores the company’s commitment to empowering financial institutions to combat fraud while enabling inclusive banking solutions for underserved communities. This case demonstrates Veriff’s ability to adapt its solutions to meet the unique challenges of diverse markets, solidifying its position as a trusted leader in identity verification.

FAQs: Identity theft

1. What are the signs of identity theft?

• Unexplained charges or withdrawals from your accounts.
• Denial of credit applications for no apparent reason.
• Unexpected bills or credit card statements.
• Notifications of data breaches involving your personal information.
• Suspicious activity on your credit report.

2. How is identity theft affecting businesses?

Businesses face financial losses, reputational damage, and regulatory penalties when fraudsters use stolen identities to commit fraud, open fraudulent accounts, or gain unauthorized access to systems. Businesses must implement robust identity verification systems to protect against these threats.

3. What is the difference between identity theft and identity fraud?

• Identity theft: The act of stealing someone’s personal information without consent.
• Identity fraud: Using that stolen information to commit crimes such as opening fraudulent accounts, making purchases, or impersonating someone else.

Download report now

Get all the latest global identity fraud data and insights you need to keep your business safe

Get the report

The post Combating threats: Business-centric strategies for identity theft and fraud protection appeared first on Veriff.

The rise of generative AI has reignited public interest in artificial intelligence, positioning the finance sector as a leader in AI adoption across industries. This is largely due to the widespread use of traditional AI, like machine learning (ML), which has been a staple in the sector since the late 2000s. Although generative AI is less prevalent today, it is expected to gain traction in the industry in the years ahead. In 2023, the financial services sector invested around 35 billion USD in AI, with banking leading the way, contributing approximately 21 billion USD.

Artificial Intelligence (AI) is revolutionizing financial services, bringing advancements in areas like fraud detection, customer support, predictive analytics, and risk management. It has become a crucial tool across multiple business divisions within financial institutions, each utilizing it in unique ways. In 2023, the operations segment saw the highest adoption of AI, followed closely by risk and compliance. 

Regulatory concerns

However, the rapid adoption of AI brings complex regulatory challenges. Navigating the evolving AI regulatory landscape is critical for financial services providers to maintain a competitive edge while ensuring compliance and ethical standards.

With plans to rescind President Biden’s 2023 AI Executive Order and reduce regulatory barriers, the regulatory landscape is set to become less predictable. While these proposals have sparked debate among industry experts regarding their practicality, they signal a broader trend of prioritizing innovation over heavy regulation, which is likely to influence the financial services sector.

This guide outlines five steps financial institutions can take to effectively address the regulatory risks of AI while maximizing its potential:

Step 1: Stay ahead of evolving AI regulations

AI regulation in the US is fragmented, with state-level initiatives like Colorado, Utah, and California setting the pace. Colorado and Utah have implemented cross-industry laws addressing AI risks, drawing inspiration from the EU’s framework. California’s Consumer Privacy Act (CCPA) emphasizes transparency in AI systems, particularly for large-scale models and synthetic content.

As mentioned earlier, leadership changes have shifted regulatory priorities at the federal level. President Biden’s October 2023 Executive Order on AI emphasized safe, secure, and ethical AI development. However, the Trump administration’s plans to rescind this order signal a pivot toward less regulatory oversight. This evolving landscape underscores the importance of monitoring both state and federal developments to anticipate future requirements.

Financial services companies should also pay close attention to any guidelines and statements issued by their respective regulators, which will reflect and guide the acceptable use of technology, and also the risks that the regulators see as important to address. For example, FinCen has proposed a rule to strengthen and modernize financial institutions’ anti-money laundering and counter the financing of terrorism (AML/CFT) programs pursuant to the Anti-Money Laundering Act of 2020 (AML Act). The rule itself specifically calls for the potential to adopt machine learning or AI as an innovative approach for financial service providers to more effectively comply with regulatory requirements.

Actionable strategy:

Financial services firms should develop adaptive strategies to address the regulatory patchwork. Proactively aligning AI strategies with emerging guidelines, both at the state and federal levels, ensures compliance, operational resilience, and readiness for future changes.

Step 2: Address bias and discrimination risks

AI systems in financial services can inadvertently perpetuate bias, especially in critical areas like lending, credit scoring, and hiring. Federal authorities, including the Federal Trade Commission (FTC) the Department of Justice (DOJ), and the Consumer Financial Protection Bureau have signaled their intent to enforce anti-discrimination laws rigorously. The 2023 “Joint Statement on Enforcement Efforts Against Discrimination and Bias in Automated Systems” reinforces the urgency of addressing this issue.

Actionable strategy:

Conduct regular audits of AI models to identify and mitigate biases. Implement diverse datasets and ensure fair outcomes in decisions such as loan approvals.

By proactively addressing bias, financial firms can build trust while avoiding legal repercussions.

Step 3: Strengthen data privacy and security

AI’s reliance on data makes privacy and security top concerns. Financial institutions must align with existing data protection laws, such as the Gramm-Leach-Bliley Act (GLBA), and prepare for future state-specific regulations. The US today operates with a patchwork of state-specific privacy laws which have to be read in conjunction with any exceptions they might provide for financial services companies. Therefore, financial services companies should understand whether the activity they pursue with the help of AI also subjects them to specific privacy obligations, and if yes, to what extent.

Actionable strategy:

Financial firms should establish robust data governance frameworks, ensuring that customer data used in AI systems is protected and compliant with all relevant laws.

Step 4: Enhance operational transparency

Regulators and customers increasingly demand transparency in how AI systems operate. For financial institutions, explainable AI (XAI) practices are essential, particularly for high-impact decisions like loan approvals and fraud detection.

Actionable strategy:

Develop systems that allow regulators and customers to understand how AI decisions are made. For example, use visual dashboards to explain AI-driven outcomes in simple terms.

Operational transparency not only helps compliance but also fosters customer confidence in AI systems.

Step 5: Balance innovation with regulation

The financial services sector must balance the need for innovation with the responsibility to comply with regulations. Overregulation risks stifling AI’s potential, while under-regulation could lead to ethical lapses and erode consumer trust.

Actionable strategy:

Engage in policy dialogues to advocate for balanced AI governance. Collaborate with regulators and industry bodies to ensure practical, clear, and consistent policies.

Firms that prioritize ethical AI practices and advocate for pragmatic regulations will be better positioned to lead in a competitive landscape.

Webull: Strengthening security and trust through AI-powered Identity Verification

Webull, a leading online trading platform, is at the forefront of leveraging cutting-edge technology to ensure secure and seamless user experiences. Partnering with Veriff, Webull implemented advanced identity verification solutions to enhance fraud detection and streamline its onboarding process. This collaboration not only fortified Webull’s compliance with regulatory standards but also demonstrated a commitment to operational transparency and user trust. By integrating Veriff’s AI-powered systems, Webull effectively addressed critical challenges in fraud prevention while maintaining an innovative edge in the highly competitive financial services industry.’

Providing our users with a safe and secure platform has always been a top priority at Webull, and Veriff has helped us to do so. Compared to previous partners, Veriff has been able to support us in identifying fraudulent activity accurately and effectively – even as platform user numbers climbed.

Brendan Fuller Chief Risk Officer, Webull

Conclusion: Building a resilient future

AI holds immense potential to revolutionize financial services, offering innovations that enhance efficiency, security, and customer experience. However, these advancements come with intricate regulatory challenges. Addressing key issues such as bias, data privacy, and transparency while remaining adaptable to shifting legislative priorities is crucial.

With the Trump administration poised to roll back certain federal AI regulations, financial institutions must navigate a landscape where state-level policies dominate and federal oversight becomes less centralized. This deregulated approach may lower compliance costs, but also creates uncertainty, underscoring the need for financial firms to monitor state-driven initiatives and engage in policy dialogues to influence practical, balanced AI governance.

Financial institutions that balance innovation and compliance will be better positioned to thrive amid these complexities. Firms can build trust and resilience by embedding ethical AI practices, fostering transparency, and staying ahead of regulatory changes. Those who proactively adapt to both state and federal developments can lead the way in creating a robust, trustworthy financial ecosystem in an increasingly AI-driven world.

The post Five ways to tackle AI risks in US finance by 2025 appeared first on Veriff.

Don’t miss the chance to explore the latest trends and gain actionable insights essential for combating fraud and protecting your business. Download our Identity Fraud Report 2024 today!

Account takeover (ATO) fraud is one of the greatest threats facing online businesses today. Not only can the crime cost businesses huge sums of money, but it can also overburden IT and customer services teams and ruin the reputation of your business. It’s no wonder that fraud detection is now a key priority for organizations around the globe. 

To help you guard against the threat of this fast-growing form of fraud, in this guide, we’ll cover the major types of account takeover fraud and the steps you can take to stop fraudsters in their tracks. 

1. Understanding ATO: definition & overview

ATO is a form of identity theft. It occurs when a bad actor takes control of a user’s account without their permission to commit fraud.

The process of taking over an account involves two steps. First, the fraudster will steal or purchase a user’s credentials on the dark web. They can then log into a user’s account.

During the second stage of the process, they will make a series of non-monetary changes to the account, such as changing the password or altering the victim’s personally identifiable information.

Once these two steps are completed, the fraudster has gained complete control of the account and has locked the original user out. They will now make a series of monetary transactions or sell the account to someone else.

The fraudster will then attempt to replicate their success by taking control of a user’s other accounts. This becomes possible if they have used the same password and login information for multiple accounts.

2. Why is it such a threat?

There are several reasons why account takeover fraud is one of the biggest threats facing businesses today. First, the methods employed by fraudsters attempting to gain control of accounts are becoming increasingly sophisticated and hard to detect. For this reason, businesses that do not take the ATO threat seriously could soon become the target of fraudsters.

If a fraudster gains access to a user’s account and uses that account to make purchases,  the customer will likely blame your business for the security breach (even if the lapse in security was their responsibility). For this reason, an ATO attack can irreparably damage the relationship between a business and its customers and cause wider reputational damage.

But the cost of account takeover fraud isn’t purely reputational. After all, if a criminal gains access to pilfered login details via an account takeover, it can have significant financial repercussions for a business. IBM reports that the typical corporate breach costs close to $5 million. Larger organizations are particularly prone to account takeover attempts as they are more appealing targets for cybercriminals.

On top of this, ATO attacks impact almost every department in a business. This is because the consequences of a security breach mean:

• Your IT team must investigate any hacks and the robustness of your security system
• Your finance team must fight chargebacks when fraudsters claim a refund on a product through bogus means while retaining the item 
• Your customer support team will be overwhelmed by customers who are trying to reclaim their accounts

3. Who is vulnerable to account takeover fraud?

Account takeover fraud is growing all the time for one reason – almost everyone is vulnerable. This is because fraudsters can deploy the same techniques across a range of different accounts.

Some common targets for account takeover fraud include deposit accounts, government benefits accounts, checking  accounts, online gaming accounts, store loyalty cards, credit cards, and email accounts. 

If the fraudsters succeed, there are various ways they can use hacked information. For example, they might order a new card from the user’s credit card company, using it to make fraudulent purchases. Perhaps they could sell the verified information on the dark web or redirect any benefits received. 

Whatever the precise misuse of an account, one thing is clear – it must be stopped in its tracks. 

4. Types of account takeover

The types of account takeover fraud chosen by the attacker will depend on their goal and available resources.

Major types of account takeover fraud include:

Credential stuffing

To carry out a credential stuffing attack, a fraudster will usually purchase a list of leaked credentials online, often through a large data dump. Using this information, they will test combinations of usernames and passwords across various websites until they can gain access to an account.

Sadly, leaked credentials are widely available on the dark web. Because many users either select weak passwords or reuse them, this type of account takeover fraud has a high success rate.

SIM swapping

Two-factor authentication provides significant security benefits. Customers access their accounts not just through a password but also by using a secondary method: utilizing a one-time code sent to their mobile number, which is a common approach. 

With a SIM swapping scam, fraudsters seek to overcome this technique by transferring a user’s phone number to another SIM card; they can use it then to get authentication codes meant for your number. They can use this to access your bank accounts, social media accounts, and more, as well as notes technology giant Microsoft. 

The criminals achieve this through various forms of ‘social engineering’: for example, using social media to harvest data and personal information (such as their mother’s maiden name) that they can then use to trick a mobile carrier into transferring their mobile number to them.  

Once this process is complete, the fraudster can attempt to log into the user’s banking app. If the bank’s authentication processes include text messages as a means of delivering one-time passwords, then the fraudster can access the user’s account and perform fraudulent transactions, add payees, or perform other operations during a banking session.

Phishing scams

Phishing is a common online security scourge that comes in various forms. Perhaps the best-known type sees attackers send emails – or a text message or another communication method – with fraudulent links.  These links could feature dangerous malware designed to inflict harm on systems. 

Phishing could also seek to gather information. If the user clicks on the link, they’re taken to a fake login page where they’re asked to enter their login credentials. This information is then captured and can be exploited by the fraudster. Phishing attacks can be incredibly damaging, as a fraudster can target thousands of users at any one time.

Another danger is spear phishing, which is a much more targeted attack. Criminals use social engineering and background sleuthing to target a specific individual rather than thousands of people.

For instance, a criminal may use a user’s email address to find a linked Facebook account. Using the information on this account, they may find that this user has a sister. Following this, they’ll create an alias so that the spear phishing email appears as a genuine message from the user’s sister asking for sensitive information.

Malware

With a malware attack, a fraudster takes control of a bank account by installing malicious software (known as malware) on the victim’s computer or mobile phone.

This happens when the user downloads an app, a piece of software, or an unverified update from an untrusted source. Some forms of malware, known as keyloggers, will then intercept and save everything the user types, including their online banking details.

Man-in-the-middle (MITM) attacks

During a MitM attack, fraudsters position themselves between the financial institution and the customer. This allows them to intercept, edit, and send and receive communications without notice.

MITM attacks exploit how data is shared between a website and a user’s device – whether that’s their computer, phone, or tablet. They will commonly set up a malicious public Wi-Fi network that a user will unwittingly access.

For example, a coffee shop may set up a Wi-Fi network called ‘free coffee shop Wi-Fi’ or something similar. A user looking to take advantage of public Wi-Fi will then transfer their payment data through the network, which is controlled by the criminal actor.

Call center fraud

Call center fraud is common in the banking industry. Before they attempt to access a bank account, a fraudster will contact the victim and ask them to verify their PIN, security questions, and multi-factor authentication tests. The victim then unwittingly provides the fraudster with all the information they need to access their account.

5. Where is your business at risk?

Fraudsters target businesses that rely on lax security systems and inadequate fraud prevention measures. To prevent account takeover fraud, businesses must implement security measures. 

Such security measures should include both internal security processes and customer-facing security processes. By following cybersecurity and data protection best practices, a business can ensure that it won’t be the cause of a data breach. These processes and best practices should include things like automatic notifications when something changes on a customer’s account, multi-factor verification, and detection tools 

Businesses should invest in systems that help them accurately verify the identity of users before they’re allowed access to their accounts. By reducing reliance on static passwords and instead prioritizing biometric identifiers, a business can lock fraudsters out of an account before they can make any changes.

Similarly, businesses should have systems to help detect suspicious activity in case a fraudster successfully takes over an account. These suspicious signals could include a high number of authentication attempts on different accounts from the same IP address, mass password reset requests, and multiple changes to an account at any one time.

On top of this, businesses should ensure that their customers are keeping their data private and secure. They should encourage their users to:

• Educate themselves on how to beat and detect identity fraud
• Learn more about the techniques used by fraudsters
• Create unique passwords for each of their  accounts
• Never click on suspicious links
• Deploy multi-factor authentication on their accounts 
• Never give out their data and passwords to others

6. How to recover from an account takeover attack

To bounce back from an account takeover, your organization must take four key steps.

• First, secure all affected customer accounts, preventing fraudsters from causing any more damage
• Second, the accounts must be reclaimed and returned to the affected customers. This stage demands direct communication with customers to explain what has happened; they should be invited to change their password and confirm all associated credentials
• Third, conduct a thorough review that outlines how the takeovers happened and how well your organization responded
• And finally, analyze how you can stop such an attack from happening again by boosting security measures and building up your fraud detection capabilities 

Facial biometric authentication can help your organization prevent ATO. Using the unique facial characteristics of an individual to access their account makes it more secure and offers a better user experience.

7. How does Veriff help?

At Veriff, we’re proud to offer a range of class-leading solutions that can help you secure user accounts and lock out bad actors. Our identity verification solution and AML and KYC solution can help you verify new users at onboarding, while our biometric authentication solution can be used to authenticate returning users and prevent account takeover fraud. 

This solution is much more reliable than passwords and one-time passcodes and is perfect for securing user accounts. It also allows you to lock fraudsters out of an account before they can change a customer’s details or attempt to make a purchase.

Not only is our biometric authentication secure, but it also accelerates the user authentication process. Utilizing facial biometrics (via the use of a selfie) to match the returning user compares the image with our existing session data and quickly identifies the user. As a result, it eliminates friction and facilitates a smoother user experience.   

Led by powerful automation, our software can authenticate any user’s identity in only one second. 

8. Speak with the fraud prevention experts at Veriff

Your business must put the correct detection processes in place to prevent fraud. These processes and systems can stop fraudsters before they’re able to access a user’s account and can be used to resist all the major types of account takeover fraud.

If you want to discover more about how our class-leading solutions can help a financial services business like yours, talk to our fraud prevention experts today. We’d love to provide you with a personalized demo showing exactly how our solutions can help keep your business and customers safe. We offer a variety of plans to help you build your defenses and look to the future. 

Featured

Download report now

Get all the latest global identity fraud data and insights you need to keep your business safe.

Get the report now

The post Inside the threat: Exploring the 6 major types of account takeover fraud appeared first on Veriff.

In an increasingly digitized economy, more than ever fraud occurs online; businesses must be wary of the red flags of suspicious activity, and block bad actors that could be guilty of fraud. However, in the drive for growth and scalability, businesses may accept that some level of fraud will exist on their platform. So, if fraud is inevitable, what are the potential consequences, and how much fraud should you accept as part of the calculation of profit and loss for your business?  

Fraud as a direct bottom-line issue

At a minimum, when a bad actor attempts to commit fraud it’s likely to cause inconvenience for your legitimate customers. At the more extreme end, loss of life savings is unfortunately quite common, with people transferring huge sums to fraudsters in the belief they’re making sensible investments or protecting their pensions. 

For small-to-medium size businesses themselves, the impact of fraud can be just as severe. If a firm pays a large invoice to a fraudster instead of the rightful recipient, not only will they have lost that money, but they still need to pay the original supplier. In this situation, cashflow can rapidly become an issue. 

But let’s imagine that that’s not a major concern for your business. Perhaps your scale makes the financial impact negligible, or maybe your business model is focused on maximum revenue generation and rapid growth. You may think that accepting a certain amount of fraud is actually a smart business move – stringent security causes transactional friction, which leads to frustration for customers, which causes dropout, right?

Wrong. The full implications of leaving fraudsters to act go way beyond the direct impact to your bottom line.

How fraudsters undermine businesses

Even for the largest, most cash-rich businesses, being caught out by fraudsters can end up doing significant damage. That’s because issues including data breaches, fines, regulatory censure, and even association with criminal behavior – including money laundering, terrorism and human trafficking – can all stem from a fraud attack. To properly understand the potential consequences of failing to prioritize fraud prevention, let’s take a step back. 

Firstly, how are your legitimate customers going to feel if fraudsters are able to exploit them, leaving them at best inconvenienced – and at worst severely out of pocket? The most likely consequence is that you’ll lose a customer. But that could just be the start of your problems.

Other than taking their business elsewhere, the next most likely thing an affected customer will do is post a negative review online. Ratings and reviews have always been important to consumers, but in recent years they’ve come to rank even above price as the most important factor impacting their buying choices. In fact, 98% of consumers feel reviews are essential to making purchase decisions. Potential customers are going to use that review to benchmark your business against your peers. So, ultimately, it’s going to negatively affect your bottom line.

Or imagine that rather than targeting customers, fraudsters pretend to have a legitimate business relationship with your business and manipulate an employee into providing access to sensitive data. Suddenly, you could find your trade secrets are in the hands of criminals ready to sell them to the highest bidder, or that the personal information of thousands of your customers has been leaked online.

The law of unintended consequences

At this point, the issue becomes what Warren Buffett once called ‘the newspaper test’. Essentially, how are you going to defend your reputation once your business name starts to appear in headlines about the latest huge data breach?

Additionally, how does that affect you from a regulatory standpoint? Once your brand is noted for falling short, regulators are likely to hone in on you. You may be able to pay the legal costs and fines resulting from any negligence on the part of your business, but what about the ongoing attention and the potential tightening of regulations. And added to this is the operational cost of managing media attention, conducting internal review, and carrying out any necessary changes to your systems and processes. 

So, even if you can afford the direct bottom-line impact of fraud, can you really afford the wider consequences of all the other issues that can follow behind it in a chain reaction? 

Minimizing the risk to your business

Unfortunately, it’s pretty close to impossible to completely stop fraud. But that’s far from a reason to ignore the issue. If your business appears to have done too little to prevent the actions of fraudsters, the likely result will be serious reputational damage – or in the worst case scenario, total business failure.

By making your business less susceptible to attacks and more resilient when they happen, you’re minimizing the return on investment for fraudsters, who are likely to turn their attention to easier prey. That’s not only good for your customers, it’s vital for the long-term health of your business.

Get more details

To find out more about how Veriff’s fraud prevention solutions can help you address the threat to your business from bad actors, visit our Fraud Education Center.

Learn more

The post Zero Tolerance: Understanding Why Any Level of Fraud is Unacceptable in Business Today appeared first on Veriff.

Get more details

Discover more about how IDV is powering BNPL sector growth and customer acquisition in the fight against stolen identities.

Learn more

The post How Identity Verification Combats Fraud and Powers Growth for BNPL Providers appeared first on Veriff.

–

Fraud detection software refers to securing your business and its accounts. By using fraud detection software, you can lock out bad actors from your financial institutions, safeguard sensitive information, and boost confidence in your security systems. 

Here, we’ll outline everything you need to know about fraud detection software, including what fraud detection tools do, the benefits they provide, and the key features you need to look out for.

How to Detect Fraud? The Role of Fraud Detection Software

A fraud detection tool is designed to prevent fraudulent actors from accessing a service or a user’s account. These solutions work by verifying the identity of a user before granting them access to the service or account.

Generally speaking, fraud detection tools are used in three separate instances: verifying a user’s ID, as part of the onboarding process, and verifying the identity of returning users. Let’s take a look at each instance in greater detail.

ID verification

Fraud detection software can be used to verify a user’s ID. In doing so, it can detect fakes and documents that have been tampered with.

In order to verify the identity documents of real people, these fraud detection tools ask the user to take a picture of their government-issued ID. The tool then automatically detects whether it’s a driver’s license, passport, residence permit, or standard ID. Following this, it then instructs the user whether the back of the ID is required, making the experience seamless.

This data is then analyzed and the business is provided with a decision about the authenticity of the document in a matter of seconds.

Onboarding

These pieces of fraud detection software ask the user to snap a photo of their ID and provide a selfie before they’re allowed to create an account or access a service for the first time.

The user’s ID is then verified and their selfie is checked for likeness. An identity verification solution can reach a decision in around six seconds and users enjoy a frictionless experience.

Verifying the identity of returning users

On top of this, fraud detection tools can also be used to verify the identity of a returning customer. Fraud prevention tools such as these use biometric authentication in order to confirm that a returning user is exactly who they’re claiming to be. In doing so, these tools use a selfie-based authentication method that is far more secure than using a password or one-time passcode.

In order to gain access to an account or service, a user must provide the fraud detection software with a selfie. The tool then checks the supplied image for liveness and realness in real time. To complete the process, it compares the selfie to a previously verified face and identity. An authentication decision can be reached in as little as one second. 

Why is fraud detection so important for organizations?

Fraud detection tools are vital for stopping fraudulent activity from taking place. This process involves a criminal actor using a person’s stolen details to commit a crime.

Examples of common types of identity fraud risks include:

• Opening a new bank account
• Obtaining credit cards & card numbers (credit card fraud), loans, or benefits
• Ordering goods in someone else’s name
• Obtaining genuine documents like a passport or a driving license in someone else’s name

Identity fraud is a serious crime. Sadly, it’s also more common than we’d like. Our 2021 Identity Fraud Report revealed that:

• Identity fraud makes up close to two-thirds of all fraud incidents globally and has doubled compared to 2020
• Global fraud has increased in the U.S. & Europe, with Europe seeing its fraud rate double from 2020

As a business, you have a responsibility to prevent fraudsters from accessing your services. This is particularly the case if your business is a ‘financial gatekeeper’, such as an accountancy firm, a bank, or a law firm.

Thankfully, fraud detection tools like ours can help you carry out the identification and verification process seamlessly. This means that these tools can detect fraud before a criminal actor is able to access any money or sensitive information.

If you allow fraudsters to access accounts or your services, then you may struggle from both reputational and financial damage. As well as leading to negative headlines, instances of identity fraud and identity theft can cause customers to leave your business. If you’re subject to know your customer (KYC) regulations, then you also may face huge fines from regulators.

Benefits of using a fraud detection platform

By using a fraud detection platform, your business will experience a number of benefits, including:

Increased security

By proactively preventing fraud and anti money laundering from occurring, you can secure accounts. With a proper fraud prevention measures in place (rather than simply relying on passwords and one-time passcodes), your business can make sure that accounts are locked down and cannot be accessed by fraudsters.

With increased security in place, bad actors will be less likely to target your accounts and services.

Boosted confidence

When you put effective fraud detection and prevention in place, your customers will enjoy increased confidence in your business and its operations. This is because they know their data and personal information are safe and cannot be accessed by fraudsters. This, in turn, can lead to an increase in business if your competitors fail to put equivalent systems in place and allow fraudulent attacks to happen.

Lessen the risk of damage

With these systems in place, you dramatically lessen the likelihood of hackers and fraudsters gaining access to accounts and personal data. As a result of this, you also significantly reduce the risk that your business will face reputational damage from allowing data breaches to happen. This also means you’ll greatly reduce the risk of facing a fine from regulatory bodies.

Lowers costs

By stopping fraud from taking place, a fraud detection platform can actually save you money. This is because, by reducing manual review rates, these pieces of software lower your operating costs. Plus, by stopping fraudulent actions before they take place, the platform can also significantly reduce costly chargebacks.

What you should look for in a fraud detection platform

The right fraud detection platform will stop fraud, build trust, and make the identity verification process simple.

Different tools suit different purposes, but the best tools on the market share three common traits: they’re fast, they’re easy for customers to use, and they’re accurate.

Speed

Customers expect a seamless experience when they try to sign up for a new service or access their account. While having the right security systems in place is vital, it’s equally important that these systems do not hinder customers. Due to this, top fraud detection platforms like ours automate as much of the process as possible in order to make it much quicker.

Thanks to a 98% check automation rate, our solutions can guide the user through the identity verification process in around six seconds. This means that customers face minimal disruption and you receive much higher conversion rates.

Easy to use

In the modern age, customers expect seamless experiences. These customers are also unwilling to part with their data unless you make the process and your motivations as transparent as possible.

Top fraud detection platforms the process clearly to the customer and then guide them through it, providing feedback along the way. By making the process easy and guiding your customers through that process on a step-by-step basis, you can boost conversions and verify more customers on the first try.

By providing real-time user feedback and reducing the number of steps in the process, top solutions like ours provide a top-class experience for customers. Ultimately, this means that we can verify 95% of your users on the first try. Again, this increases conversion by up to 30%.

Accuracy

Finally, to satisfy regulatory requirements, you also need to ensure that your chosen fraud detection software is accurate.

By employing highly accurate face detection and biometric authentication, we’ve ensured our solutions are as accurate as possible. In fact, as well as verifying 99% of users on their first try, our biometric authentication solution is also 99.99% accurate. This means you can have confidence in your system to keep bad actors at bay.

Prevent customers from being the victim of scams and attacks with Veriff – Request a demo

If your business would like to know more about how to prevent identity fraud and the steps it can take to stop bad actors from accessing its services, then book a consultation with Veriff today. We’ll explain exactly how we can help you meet compliance and KYC obligations.

Download report now

Get all the latest global identity fraud data and insights you need to keep your business safe

Get the report now

The post The role of fraud detection software appeared first on Veriff.

Statistics show that fraud is increasing significantly: P2P fraud saw a 733% increase from 2016 to 2019; account takeovers increased 72% from 2018 to 2019, and 2019 alone had 5,183 data breaches of 7.9 billion exposed records.

Predictions for online fraud were worrying enough at the beginning of the year, but then COVID-19 hit, and things seemed to get even worse. With vast amounts of people being driven online, an increasing number of opportunities have arisen for unscrupulous fraudsters to take advantage of them. 

So, what is it that is causing the fraud trends at the moment? The explosion in the number of digital channels, computational power, and advanced technology such as AI are all significant influences. Social media is also one area highly targeted by cyber criminals.

You would have thought that with all the incredible work being done by companies like Veriff who are tirelessly working against fraud, fraudsters might be losing the battle. Unfortunately, as technology advancements are being achieved by the good guys, they are also being sought by the bad guys. It just shows how important it is for companies to keep on top of their digital security systems to protect both themselves and their customers´ experience. 

Here is Veriff’s overview of 7 trends that are happening in online fraud right now:

1. New account fraud

There has recently been a substantial rise in fraud attacks in new account fraud enabled by a sudden increase in the creation of so-called ‘synthetic identities’. These identities are either faked, stolen, modified from real data, or bought on the dark web. 

Fraudsters use them to get into new bank accounts, wait until they have achieved maximum advantage, and then simply ‘bust out’ either with data or financial gain – steal personal data from the credit cards and make fraudulent transactions. Fraud schemes have different forms. Another way these identities are used is on online marketplaces that offer promotions to new customers. The synthetic identities are combined with stolen payment cards and then dozens of non-existent individuals are suddenly quid’s in.

Robust identity verification techniques are essential for companies if they are to strengthen their foundations against new account fraud. Processes that ensure that applicants have to put their real face forward (and provide sufficient evidence that they are who they say they are) when they are first creating their account are essential. 

2. Account takeover fraud

Research from the Fraud Trends and Tectonics white paper shows that instances of account takeover fraud (ATO) are on the rise. Part of the reason for this is that it is generally easier for fraudsters to interfere with an existing account than to open a new one and, often, the payoff of doing so can be much quicker.

Fraudsters doing this rely on the fact that an established and trusted relationship between a service provider and customer may well be subject to less rigorous anti-fraud processes. 

ATOs are certainly not new but they are on the rise and it is likely we will see an increase in the number of attacks and the various way they are carried out. It is a worrying fact that although many companies spend millions preventing other types of fraud, ATOs are not taken as seriously as they perhaps should be. 

Increasingly sophisticated tools that allow fraudsters to ‘scrape for ATOs’ or bypass 2FA processes to access login and password data are exacerbating the situation. 

3. Go phish

Phishing has always been the most common type of cyber-attack, and it preys on people’s vulnerability. Traditionally, phishing has involved a fraudster recreating a legitimate-looking website or email domain of a trusted company and then sending links to malware via email, which unsuspecting people are tricked into downloading. 

More recently, phishing has evolved, and it now takes place via SMS (smishing), or by voicemail (vishing) when the Interactive Voice Response (IVR) system of a renowned company is copied and recreated.

Vishing can be particularly upsetting and disturbing as the victim often can feel violated that they were tricked by such an authentic-sounding voice. 

Phishing is still the main cause for data breaches, and the trend here is that fraudsters and hackers are getting bolder and utilizing more complex techniques than ever before. 

4. Social engineering

A few years ago, it was thought that the war had been won against social engineering scams. However, as banks and other organizations employ more robust anti-fraud technology, fraudsters are instead turning their attention to an easier target – the customers. 

This means that social engineering, whereby criminals attempt to deceive people in order to manipulate them into divulging their personally identifiable information (PII), is once again on the rise. 

The most worrying thing about this trend is that these scam artists do not have to be expert coders or sophisticated hackers in order to fool their victims. In effect, anyone could try this type of scam which is why we all need to be vigilant against it.

5. Authorized Push Payments

Authorized Push Payment (APP) scams are expected to rise in frequency in the coming months and years. This is when a victim inadvertently authorizes a payment into an account that they wrongly believe to be legitimate. 

One of the factors behind why this type of scam is increasing is the roll-out of so-called ‘faster payment’ processes by banks across the globe. Although it creates a customer-centric and user-friendly service, it does have its negative side. This is because it means that fraudsters can access and steal money in real-time and ‘get away’ before any duplicitous activity is detected, let alone prevented.

6. Coronavirus cybercrime

Businesses and services have been driven online in recent months due to widespread social distancing and COVID-19 government regulations causing people to stay at home.

With such a large number of transactions having been shifted online so quickly, companies have been disrupted at a scale not seen before. 

This means that the opportunities for fraudsters to take advantage of new – and potentially poorly designed – digital platforms have increased tenfold. In particular, the telecommunications, retail and financial services industries have been especially affected. 

According to TransUnion, the percentage of suspected fraudulent digital transactions rose 5% from March 11 to April 28 when compared to January 1 to March 10, 2020. In addition to this, more than 100 million risky transactions from March 11 to April 28 were identified.

This situation is still unfolding, but it is clear that the businesses that will survive this period of turbulence are the ones that will leverage the most advanced and robust fraud prevention tools.

7. Deepfakes

Deepfakes have garnered widespread attention recently, and a trend is emerging where they are increasing in prevalence.

 Deepfakes are synthetic media whereby an image or video of a person is replaced with the likeness of someone else. Faking content in this way is not new, but the technology being used to create it has now become very complex. Techniques are being leveraged from machine learning and artificial intelligence, resulting in high-quality audio and visual content that is very successful in deceiving people.

Scammers are using it to bypass and overcome facial recognition or voice biometric protocols put in place by financial institutions and other organizations. 

As an example, a notorious deepfake took place last year. A UK-based energy firm was attacked when an executive was duped into believing he was following instructions from his CEO but transferred $243,000 to a fraudulent account.

Deepfakes have caused growing worries about how new technology is being increasingly used to undermine trust, empower fraudsters, and make traditional communication streams much more vulnerable to attack.

The post Navigating the Risk Landscape: Exploring the 7 Latest Trends in Online Fraud appeared first on Veriff.