January 2022 Summaries

Socure and investing platform Public.com received IDC’s Future of Trust Award for an identity verification and fraud prediction deployment that IDC said improved trust, customer experience, and business outcomes. Public.com adopted Socure to increase accurate applicant verification while managing fraud risk, regulatory compliance, and onboarding friction, reporting a 15% rise in positive identifications that it associated with a similar increase in enterprise value, along with an approximately 30% reduction in manual onboarding-review costs. The companies also emphasize that the platform supports Public.com’s mission of making investing more inclusive by using broader data sources and frictionless verification, while allowing community members to remain anonymous to one another.

After pandemic-era relief, entitlement, tax, and unemployment programs experienced major increases in suspected identity fraud, U.S. agencies expanded efforts to prevent improper payments, investigate criminal networks, educate consumers, and strengthen identity verification. Cited initiatives include the White House’s identity theft and public-benefits program, a forthcoming Joint Financial Management Improvement Program report, Department of Justice actions against money mules, IRS taxpayer-protection outreach, and FinCEN priorities addressing synthetic and internet-enabled fraud. The piece highlights estimates of substantial potential fraud in Paycheck Protection Program loans and unemployment benefits, while noting that synthetic identities can also facilitate money laundering and terrorism-related activity. It predicts that government agencies will pursue more partnerships with private-sector identity-verification providers in 2022, and presents Socure’s expanded public-sector group as part of its intended contribution to faster access to services, lower fraud losses, and stronger program integrity.

In late 2021, a coordinated cyber fraud ring launched a high-volume application fraud campaign against two financial institutions, using “PII tumbling” to repeatedly combine changing identity details with stable contact information in an effort to find acceptable account-opening combinations. The attack, which originated through IP addresses linked to North America, Chile, and Nigeria, represented nearly half of online account applications for one business line at an affected institution and posed the risk of major financial losses. Socure states that its Sigma Identity Fraud and ID+ tools detected the activity in real time, allowing one institution to maintain its existing risk settings while another broadened its review threshold from the riskiest 1% to 3% of applicants within an hour and retrospectively reviewed earlier applications. The case emphasizes the value of consortium data, rapid adjustment of fraud controls, and analysis of multiple identity and behavioral signals—including devices, emails, phones, IP addresses, and behavior—using advanced analytics to distinguish legitimate applicants from evolving fraud attacks.

Deepfake technology, which uses artificial intelligence to fabricate or alter images, faces, and speech, is increasingly accessible and poses a growing threat to identity verification systems. The author argues that fraudsters are advancing faster than many defenses, as conventional document validation and liveness checks can be bypassed by sophisticated impersonation attempts involving legitimate personal information paired with manipulated photos or selfies. Efforts by companies such as Adobe and Meta to detect deepfakes through pattern analysis face limitations, since detection models require exposure to repeated fraud patterns and can be evaded through continual manipulation. The piece contends that more robust defenses require active camera capture through software development kits and specialized algorithms capable of identifying mismatches between authentic identity data and fraudulent visual representations.

Imposter scams, in which criminals deceive consumers into sending money through gift cards, wire transfers, cryptocurrency, bank accounts, or payment apps, are presented as a growing form of identity-related fraud that often relies on synthetic identities, stolen identities, or money mules to receive funds. The author cites FTC data showing that imposter scams were the most costly fraud category in 2020, affecting one in five consumers and causing $1.228 billion in losses, roughly double the previous year’s total, while phone calls remained the most common initial contact method. The post predicts that scammers will increasingly shift away from gift cards, whose risks are more widely understood, toward cryptocurrency and demand deposit or savings accounts, and anticipates further major growth in victims and losses. It argues that banks and fintechs can respond by combining identity verification signals at account opening with ongoing transaction monitoring to detect synthetic identity fraud and related scam activity earlier.

Cryptocurrencies grew rapidly into a mainstream asset class, reaching an estimated market value of nearly $2 trillion by late 2021, but their volatility and limited use as stable payment methods have kept them largely focused on trading and storing value. While blockchain-based systems are promoted as decentralized and secure, their ability to enable irreversible, pseudonymous cross-border transfers creates risks involving fraud, money laundering, tax evasion, and illicit financing. U.S. regulators, including financial agencies and law enforcement bodies, face uncertainty over jurisdiction and oversight as new digital assets and exchanges emerge quickly, while state-level initiatives add further complexity. Although comprehensive congressional legislation remains uncertain, the Infrastructure Investment and Jobs Act introduced additional digital-asset reporting provisions, and businesses may still face penalties despite the absence of dedicated federal rules. The material recommends that organizations adopt risk-based compliance programs, including identity verification and fraud-detection measures, to prepare for evolving cryptocurrency regulations.

Identity fraud is presented as reaching a critical point in 2022, driven in part by the rapid growth of “credit washing,” in which borrowers fraudulently dispute legitimate negative credit-report information to temporarily improve their scores. The passage links the doubling of FTC digital identity theft complaints from roughly 650,000 in 2019 to 1.3 million in 2020 largely to fraudulent affidavits enabled by simplified FTC reporting procedures, alongside broader economic pressures from COVID-19. Automated bots can scale these attacks by using stolen personally identifiable information to create fraudulent accounts, overwhelm fraud-scoring systems, and support activities including phishing, scraping, and account registration. Although regulation of bots used in financial fraud appears unlikely, proposed legislation targeting retail “Grinch bots” suggests growing policymaker attention to bot-related harms. The author expects credit-washing-related complaints to remain elevated and argues that businesses should frequently update fraud models, reduce reliance on manual review queues, and use automated identity-proofing methods such as document validation and selfie liveness detection to better resist high-volume attacks.

Identity fraud detection is portrayed as reaching a pivotal moment in 2022, with first-party fraud expected to grow as criminals exploit customer-friendly policies and gaps in credit reporting. The rapid expansion of Buy Now, Pay Later services, projected to rise from $24 billion in sales in 2020 to $100 billion in 2021, has created particular exposure because many providers use soft credit inquiries and do not report accounts to national credit agencies, limiting visibility into consumers’ borrowing activity. Pandemic-driven digital commerce and BNPL offerings aimed at credit-invisible consumers, including flexible installment plans and limited credit checks, have accelerated adoption of services such as Klarna, Affirm, and Afterpay, while also attracting fraudulent activity. The author predicts that widespread prequalification practices and possible economic pressures will further increase first-party fraud, urging BNPL providers and similar businesses to adopt stronger identity verification and fraud prediction tools.

Identity fraud is portrayed as escalating rapidly as criminals use open-source malware, deepfakes, bots, cryptocurrency, Buy Now, Pay Later services, breached consumer data, credit tradelines, and email marketplaces to build and exploit synthetic identities. The author argues that 2022 represents a critical turning point in which fraudsters currently hold an advantage through faster technological innovation, while businesses, governments, and financial institutions must improve automation, identity verification, machine-learning detection, information sharing, and industry standards. Citing a reported 300% rise in cybercrime since March 2020 and widespread pandemic-era unemployment fraud, the piece introduces a forthcoming series examining five major fraud trends: BNPL-related fraud, credit-washing bots, increasing imposter scams, disruptive deepfakes, and expanded U.S. government action.