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As we enter 2024, companies and regulators alike are looking ahead to anticipate what the year may bring in terms of compliance obligations and fraud threats. With regulations evolving and fraudsters constantly honing new techniques, staying on top of expected shifts is essential.
2024 promises to see increased focus on data privacy and security compliance as regulations like the EU’s General Data Protection Regulation (GDPR) continue to raise the bar. We may also see new rules aimed at fighting disinformation across digital channels — specifically bad actors who use AI platforms to create this content.
Meanwhile, newer forms of fraud enabled by emerging technologies are likely to appear. Newer technology like cryptocurrency and decentralized finance brings new risks, so fraud and financial crime teams will need to skill up. Additionally, regulatory change presents new challenges amid an already fluctuating industry, and the pandemic-induced surge in ecommerce and digital identity fraud types over the past few years is also expected to continue.
Read on as we explore which regulatory changes are on the horizon, what fraud tactics may emerge, and the proactive measures organizations should be taking today to protect their business and customers.
Fraud Predictions
Organizations Will Creatively Adapt GenAI Solutions
Generative AI technology has given rise to more sophisticated attacks by fraudsters — from sending phishing emails that look authentic to creating impeccable fake government-issued documents. In the next year, I am expecting organizations to creatively adapt generative AI solutions to quickly help stop these deepfakes and more sophisticated digital identity fraud attacks before any harm is done. Generative AI must be a tool in your arsenal for efficiency and risk mitigation.
Sharp Rise in Sophisticated Account Takeover Schemes
In 2024, we expect to see a sharp rise in highly sophisticated account takeover schemes involving polished social engineering tactics targeting call centers. Attacks utilizing real stolen personal data will also likely increase as massive data breaches continue to provide criminals with ammunition. Additionally, advanced phishing apps and fraud ploys leveraging conversational AI to manipulate victims will emerge as major threats. Both businesses and consumers must brace themselves for these compulsively crafty emerging attack formats.
First-party fraud is a longstanding issue, but its prevalence is on the rise. Estimated first-party fraud-related losses in the U.S. already exceed $100 billion annually, a figure expected to increase. A recent Socure study indicates that 1 in 3 Americans admit to first-party fraud, suggesting a growing problem — particularly among younger demographics. The study reveals a concerning perception of first-party fraud as a “victimless crime” with potential repeat offenses. The surge in online guidance on defrauding financial institutions amplifies the risk, while impending regulatory shifts in Authorized Push Payment Fraud may further embolden false scam claims, shifting financial liability to institutions.
In 2024, I anticipate a concerning trend where generative AI facilitates repetitive digital identity fraud, manifesting as a single digital identity, headshot, or document pattern seamlessly replicated across multiple documents. Cybercriminals leveraging sophisticated algorithms can efficiently generate a cohesive set of fraudulent documents, fostering a consistent and believable persona. This repetition poses a formidable challenge for traditional identity verification software, as the fraudulently synthesized identity maintains coherence across various documents, compounding the difficulty in detection. As a result, the industry must proactively adapt to this evolving landscape by implementing more robust, adaptive identity verification techniques capable of discerning subtle anomalies indicative of repetitive, generative AI-driven fraud.
The Rise of the ‘Citizen Fraudster’ and an Escalation of an Arms War
As easily as ChaptGPT produces a college term paper, Fraud GPT spins up scripts for scaled attacks in minutes. Now these services are sold and placed in the hands of street-level criminals without deep technical skills. Mere kids will be able to leverage an even wider set of breached identity data, providing nearly pristine identities, to launch large scale new account attacks across sectors ranging from healthcare to banks. We are entering an escalation-of-arms era. The answer will be to battle attacks with a higher bar for “trusted identity,” requiring us to widen the breadth of what we consider a 360-degree view of identity to exclude risk.
Global Unrest Leads to Stricter Identity Proofing Mandates
Global unrest and economic uncertainty look poised to continue, with ripple effects across regulation worldwide. Conflict zones create mass migration and displacement leading to stricter identity proofing mandates to prevent exploitation. Meanwhile, sanctions pressure on influential nation states impacts trade networks and supply chains. These external factors set the agenda for lawmakers and regulators who must respond to evolving risks connected to issues like human trafficking, terrorist financing, sanctions evasion, and money laundering. As such, compliance programs will need to align priority areas with new geopolitical guidance. For example, sanctions and KYC may require increased attention and resources compared to years past.
Regulator scrutiny will increase and sponsor banks will need to have more oversight and controls into the fintechs they partner with. The need for our Sponsor Bank Control Center will increase and lead banks to require Socure services for compliance and fraud.
– Brenda Banks Sr. Director of Channel Strategic Account Management and Sponsor Bank Relationships
Document Verification Prediction
Document Fraud Will Shift Drastically Amid AI Evolution
Document fraud will experience a drastic landscape shift with the availability and accessibility of modern generative AI and foundational computer vision technologies. With that brings new challenges and evolving document verification fraud vectors that need to be tackled. By staying on top of current technology and AI trends, we can better prevent and mitigate the risks associated with these emerging fraud vectors.
Deepfakes Will Increase Digital Identity Fraud to World Crisis Levels
In 2024, deepfakes and synthetic media will increase digital identity fraud to world crisis levels, but crisis drives innovation. More methods like life biometrics and forensic trackers will be needed to establish truth. Even as falsehoods attack, we can build a flexible web of reliable recognition by reinforcing trust, using decentralized ID verification systems, mathematical proofs of reality, and other ways of signing proof of life digitally.
– Josh Linn SVP of Machine Learning Product Management
Fraudster Schemes Will Quickly Evolve With AI
Generative AI will transform the way fraudsters conduct their schemes which will require identity verification and identity fraud prevention software providers to be more innovative than ever. As technology continues to evolve, so too will the sophistication of fraudulent attacks. In 2024, I predict that we will see a wave of more sophisticated attacks that will be undetectable by manual reviewers. In order to keep pace with these types of attacks, successful identity verification providers will need automated tools built with innovative computer vision algorithms and machine learning models that can outpace the innovation of the bad actors.
Our experts are always one-step ahead and are prepared for the challenges and innovations that 2024 will bring. Connect with the team here to learn more.
Socure is the leading platform for digital identity verification and trust. Its predictive analytics platform applies artificial intelligence and machine learning techniques with trusted online/offline data intelligence from email, phone, address, IP, device, velocity, and the broader internet to verify identities in real time.
