Identity fraud involving forged passports and Identity Documents accounted for 50% of all fraud attempts worldwide in 2024, with South Africa emerging as one of the hardest-hit countries.
This is according to recent data from Sumsub, a global verification platform. The Identity Fraud Report 2024 further noted that fraud rates in South Africa have soared by more than 300%. Across Africa, fraud has risen by an alarming 167% year-on-year, with South Africa among the most severely affected countries.
The top five industries with the highest fraud rate growth in 2024 compared tos 2023 are online media (180%), banking and insurance (162%), Fintech (156%), Edtech (144%), and e-commerce (137%).
The top five industries with the highest fraud rate in 2024 are dating (8.9%), online media (7.7%), banking and insurance (2.7%), video gaming (2.3%) and crypto (2.2%).
Michael Field, executive director and general manager of investments at Fedgroup, noted, “Today’s financial services providers face a vastly different landscape shaped by advanced technology and rising criminal activity. The old compliance standards are no longer sufficient – more stringent measures are essential.”
And for institutions holding a life licence, the challenges are even greater.
“Regulatory obligations in this space demand nothing less than full compliance,” explained Lelani van der Merwe, the head of governance, risk management, and compliance at Fedgroup.
Van der Merwe highlighted that submitting a clear copy of an Identity Document with visible security features can eliminate the need for certification, saving time without compromising compliance. This is crucial given Sumsub’s warning that IDs are increasingly targeted by fraudsters because of their susceptibility to tampering.
She added to this by sharing a real-life example. “An elderly client submitted existing FICA documents to us, which was accepted by another accountable institution. However, our insistence on high-quality documentation revealed that the initial documents were fraudulent, and we could prevent potential fraud.”
But compliance isn’t always straightforward. “Take proof of address,” Van der Merwe said. “It’s hard to comply when a municipality only displays your initials and surname on utility bills, and we’re asking for your full names and surname. We get it, and therefore, we aim to make compliance as painless as possible by looking at other supporting documents.”
The stakes are high for non-compliant FSPs. Regulators impose hefty fines, and reputational damage can be severe. “For large institutions, multimillion-rand fines might not sting too much, but for a player such as a small brokerage, non- or partial compliance could mean the end of their business,” warned Field. “Staying compliant isn’t just about dodging penalties, it’s about protecting clients and their financial well-being.”
This client-centric approach has proved critical in preventing fraud. Van der Merwe explained by saying, “Vulnerable clients are often defrauded by people entrusted with their care or even by family members with access to their personal information. Due to our commitment to upholding strict compliance regulations, our processes managed to flag and prevent potential incidents.”
A greater focus on advanced protection methods also builds trust, the Sumsub report notes. Despite the rising rates of identity fraud, the banking and insurance sector demonstrates the highest level of customer trust, scoring 71 points out of 100 in Sumsub’s end-user survey measuring consumer confidence in various industries to protect personal information and prevent fraud.
“This highlights the resilience of financial institutions in maintaining consumer confidence, even in the face of growing threats,” the report states.
This year’s main trend: democratisation of fraud
The Sumsub report provides a thorough, data-driven exploration of identity fraud trends and prevention strategies, enriched by expert insights.
Andrew Sever, the chief executive of Sumsub, describes fraud as an evolving, borderless threat: “What we call the ‘democratisation of fraud’ – with fraud-as-a-service platforms, AI tools, and more – has made fraud more accessible, allowing even non-experts to scam companies out of millions.”
This accessibility is fuelled by technologies and fraud-as-a-service tools that simplify fraudulent activities, eliminating the need for technical expertise. The report highlights that these trends are particularly severe in developing nations with economic instability, where fraud is often seen as a means of financial survival.
The report further outlines the organised nature of modern fraud.
“In 2024, approximately every 100th user was involved in a fraud network, reflecting the rapid growth of these organised systems. Additionally, complex schemes involving multiple participants, such as money muling, are also on the rise, making fraud more intricate and harder to detect.”
Key takeaways include:
- Deepfakes: Now entrenched as common tools, deepfakes represent 7% of fraud in 2024, necessitating advanced detection mechanisms.
- Post-KYC fraud: 76% of fraud attempts occur after onboarding, highlighting the need for ongoing monitoring systems.
- Regulatory mandates: Businesses in major markets are now legally required to compensate users for certain fraud-related losses, emphasising robust prevention measures.
- Cyber-fraud fusion: Collaborative efforts between cybersecurity and anti-fraud teams can enhance fraud detection and operational resilience.
The five key types of identity fraud in 2024
The Sumsub report highlights five dominant forms of identity fraud amidst rising global incidents. In 2024, 67% of businesses reported an increase in fraud, with 45% of companies and 44% of end users falling victim to identity fraud. These five primary fraud types include fake documents (50%), chargeback fraud (15%), account takeovers (12%), deepfakes (7%), and fraud networks (4%).
Fake documents
Forged or altered identification documents remain the most common fraud method, representing 50% of all fraud attempts. Commonly targeted documents include IDs, passports, and proofs of address, with ID cards accounting for 70% of these cases. The widespread reliance on document verification systems and advancements in forgery technology have driven this trend.
Chargeback fraud
Chargeback fraud involves disputing valid transactions to secure illegitimate refunds, disproportionately affecting e-commerce, digital goods, and service industries. These schemes exploit loopholes in payment systems and are difficult to combat, particularly for businesses managing high transaction volumes.
Account takeovers (ATO)
ATO fraud, where criminals gain unauthorised access to user accounts using stolen credentials, has surged significantly. These attacks allow perpetrators to steal funds, conduct transactions, or engage in criminal activities. A 155% increase in incidents during 2023 paved the way for a 250% year-over-year surge in 2024.
Deepfakes
Deepfakes, which manipulate images, videos, or voices for impersonation, now account for 7% of global fraud attempts. A fourfold rise in detected deepfakes since 2023 highlights their growing accessibility and misuse, such as in the Turkey-Syria earthquake charity scam. The regions most affected are the Middle East (+643%), Africa (+393%), and LATAM & Caribbean (+255%).
Fraud networks
Organised fraud networks employ co-ordinated attacks, often across multiple platforms and industries. While these schemes are less common, they are highly complex and difficult to detect during onboarding, only becoming apparent through subsequent behaviour. Fraud networks are particularly prevalent in Asisa-Pacific countries such as Thailand, China, and Bangladesh, with Oman identified as the global leader in fraud network activity.
Businesses must now defend against both low-skill, mass attacks facilitated by accessible tools and resource-intensive, highly co-ordinated schemes. The report notes that enhanced detection methods, continuous monitoring, and robust anti-fraud strategies are critical for mitigating these evolving threats.
