UK businesses face growing fraud threat

UK businesses are grappling with a serious threat from identity fraud during the transaction phase of customer interactions. According to Signicat’s report titled The Battle in the Dark, a significant 35% of identity fraud attempts within the UK take place during transactions, while another 29% occur during login processes. As malicious actors exploit vulnerabilities, it has become necessary for businesses to adopt comprehensive security measures to combat both existing and emerging threats.

Despite an alarming increase in discussions surrounding AI-generated deepfakes, Signicat's Head of Identity Proofing, Thomas Osinga, emphasises the necessity for businesses to remain vigilant against more traditional methods of identity fraud that are still prevalent. “Today we talk a lot about deepfakes, and for good reasons. But we must not forget that classic forms of identity fraud are still growing,” he asserts, drawing attention to tactics such as stolen credentials, phishing, smishing, and account takeovers, all of which have been enhanced by the use of AI technologies.

The report highlights that the transaction stage is now seen as the primary battleground for fraud attempts, with existing customers increasingly targeted. In fact, many businesses report that 19% of both transactions processed and customer onboarding efforts are linked to fraudulent activity. Reflecting a global trend, the UK’s findings align with statistics that reveal the transaction phase accounts for 40% of overall identity fraud attempts.

To effectively combat these threats, Osinga suggests a paradigm shift in how businesses approach digital trust. “Identity fraud prevention must move towards continuous verified trust. Checks must run silently in the background throughout the entire customer journey,” he states, urging organisations to integrate ongoing verification processes without introducing unnecessary friction for genuine customers.

Additionally, the rise of smishing, which has surged to account for 35% of all mobile phishing attempts according to SentinelOne, exemplifies the evolving landscape of identity theft. Moreover, emerging AI-based techniques are proving significantly more effective, with spear-phishing campaigns reportedly achieving a 54% click-through rate, as noted by the Harvard Business Review. Consequently, it becomes clearer that relying on visible security measures, such as additional passwords, is not sufficient; a more subtle, continuous approach is required.

Looking ahead, the report suggests that the demands for continuous identity verification will only amplify, particularly with the anticipated rollout of European Digital Identity (EUDI) Wallets for consumers by December 2027. As advancements in technology continue to reshape the security landscape, Osinga reflects on the future challenges: “As we transition to an era dominated by agentic AI, we move towards a relentless AI-to-AI battle.” With fraudsters poised to weaponise AI, organisations must remain proactive in employing innovative solutions that safeguard customer transactions and trust.

In conclusion, with both traditional and modern techniques being utilised in the realm of identity fraud, the urgency for businesses to reassess their security measures is paramount, ensuring they can effectively protect against the sophisticated tactics employed by today’s fraudsters