Turn AI To Your Advantage In The New Age Of Fraud

Forbes

05-06-2025

AI-driven Identity Fraud
Is Artificial Intelligence a friend or foe when it comes to fraud? The answer, right now, is both. The battle lines have been drawn, and the pace of innovation is going to determine the ultimate winner.
We are undeniably living in a new era of fraud, driven by deepfake and generative AI technologies, which empower sophisticated synthetic IDs and even the ability to bypass verification systems altogether. AI has begun rapidly replacing more rudimentary fraud methods of decades gone by.
According to a recent Prosper Insight & Analytics survey, 58% of consumers are extremely/very concerned about their personal information being used for fraudulent activities. This figure continues to steadily rise alongside the awareness of how AI tools, such as ChatGPT, can be manipulated for more nefarious means.
Prosper - How Concerned are You About Your Privacy Being Violated From AI Using Your Data
In fact, one in four consumers believe that identity verification systems are not strong enough to protect their data. This erosion of trust is prompting 47% of consumers to say they would abandon a brand entirely if they fell victim to fraud through that platform.
This year alone, reports show generative AI has been used extensively to create life-like fake passports, capable of bypassing digital verification systems that were once considered top-of-the-line.
To understand this evolving problem and how businesses must stay protected, I spoke with Jimmy Roussel, CEO of identity fraud leader IDScan.net. As the company verifies an average of 18 million IDs per month, Roussel has a front-row seat at the rapidly expanding battleground that is digital fraud.
The new face of identity fraud
Businesses around the world are looking at AI as a tool to improve efficiency, but as the rate of adoption increases, so too does the number of cybercriminals seeking to weaponize it to commit fraud. 'We are seeing everything from AI-generated IDs to deepfakes used during onboarding and verification processes,' Roussel said. 'This isn't a hypothetical threat – it's already here.'
One category Roussel believes is scaling faster than most is synthetic ID fraud. Unlike traditional identity fraud, where someone steals an individual's real information, synthetic fraud involves creating a completely new identity using a mix of real and fake data. These identities are then amplified through AI-generated documents, like passports or driver's licenses, which make detection difficult for traditional Know Your Customer (KYC) systems.
'Some of these fake passports are so good, even experienced border officials would have a hard time spotting them,' Roussel added.
A failing legacy system
A 2024 report from McKinsey highlighted that global cybercrime costs could reach $10.5 trillion annually by 2025, with identity fraud representing one of the fastest-growing contributors. Many of today's verification tools weren't designed to deal with AI-generated deception. Until now, it seems the fraudsters have been adapting and innovating at a faster pace.
Systems that rely solely on image scans, basic metadata, or selfie-video checks are hopelessly outmatched by fraudsters who are testing, tweaking, and improving fake assets. Companies are constantly playing catch-up.
According to Roussel, most businesses are relying on outdated verification tools. 'They're using 2015-era KYC systems to take on a 2025-era fraud problem. These systems weren't built with deepfakes or generative AI in mind, so they're easy to get around.'
This security problem is dangerous in many sectors of business, including financial, travel, and e-commerce.
Building a Smarter Defense
All is not lost. While many scammers have access to advanced tools, so do businesses, but it may mean replacing legacy products with previously acceptable standards. One technology that Roussel believes will become increasingly critical is Near Field Communication (NFC) scanning.
This technology isn't something you can fake in Photoshop. It verifies the data that's stored in the chip itself, making it one of the most reliable defenses against ID fraud.
A recent report from IDScan.net found that 84% of the AI-generated fake IDs were identified with image and symbology analysis alone. When combined with third-party database checks, IDScan.net was able to catch 99.6% of the fraudulent IDs.
Other innovations include behavioral biometrics, which measure unique user behavior, such as typing patterns and mouse movements, and liveness detection tools that differentiate between real people and deepfakes. Alongside the technological risk, there is also a considerable financial incentive to act now. A recent Gartner survey revealed that 53% of consumers would prefer to use a brand that incorporates stronger AI-based ID verification, even if it added a few seconds to their user journey. This shows businesses can protect both their bottom line and user experience by implementing smarter tools.
Companies that fail to update their fraud prevention protocols can also result in regulatory breaches, reputational damage, and broken customer trust, particularly in industries where consumer data security is paramount.
Roussel warns that too many businesses are stuck in a reactive mode. 'What we're seeing is companies only getting serious about upgrading their fraud prevention after a major incident. But by then, the damage is already done. What they need is a proactive mindset. One that treats identity verification as a strategic priority, not a box to tick.'
Bridging the knowledge gap
Education is one of the most important tools for organizations to combat fraud. Many decision makers are unaware of how powerful AI has become, particularly in the wrong hands, and how easy it is for cyber scammers to access information.
Within the last year alone, IDScan.net has reported an increase of 34% from the previous year in fraudulent activity in the financial and banking sectors. March 2024 showed a 37% increase in fraud volume, with April just behind March at 21.4% over annual averages.
A recent Nationwide survey shows a staggering 86% of consumers do not feel informed enough to protect themselves from AI-driven identity theft. This gap in consumer knowledge should serve as a wake-up call for businesses to double down on education and transparency as part of their fraud prevention strategies.
The accessibility of information is what makes fraudulent activity so dangerous. Fraud isn't just something that's done by advanced criminal groups anymore. Businesses need to understand that anyone can be a potential threat and need to keep ahead of the game in order to keep their data safe.
Securing the Future with Digital Trust
Looking ahead, Roussel believes the verification space will split into two distinct camps: Those who modernize and those who remain vulnerable. The organizations that integrate advanced verification methods into their user journeys, without compromising the customer experience, will be better equipped to compete, innovate, and grow securely.
'Digital trust is everything now,' he concluded. 'Whether you're onboarding new customers, verifying employees, or securing access to sensitive systems, your ability to confirm someone's identity accurately and instantly is foundational. Businesses that get this right will thrive.'
In a world where artificial intelligence is being used to both build up and break down systems, the stakes for identity verification have never been higher. However, businesses that have a powerful tool at their disposal will be the victors. By utilizing these tools and investing properly, they will be able to not only survive but thrive.