24th January 2024 — In its most recent report, Smile ID, the leading provider of identity verification services in Africa, announced a significant milestone: completing over 100 million identity checks across the continent.
This achievement is detailed in the 2024 Digital Identity Fraud in Africa Report, which also highlights a concerning trend—an increase in identity fraud. Analysing anonymised data from the 100 million verifications conducted, Smile ID reports a consistent rise in fraudulent activities each year for the past four years.
Digital businesses in Africa are facing an urgent challenge with the rise of identity fraud. Fraudsters, targeting primarily financial service providers, disguise their identities to infiltrate systems, leading to substantial financial losses and diminished trust in digital technologies. Recent hacks impacting several African companies have originated from such identity fraud incidents.
The report sheds light on the growing trend of document and biometric fraud. Data shows that the average document and biometric fraud rate increased for six consecutive quarters between 2022 and 2023, peaking at 17% in the fourth quarter of 2023.
The Identity Fraud report from Smile ID explores the prevalent methods fraudsters use, their behaviours, and regional and industry trends. It also provides crucial insight into how businesses can best combat fraud across the continent. It is Smile ID’s first identity fraud report, marking a strategic shift from the biannual State of KYC report that the company has published since 2022.
“In recent months, we’ve seen businesses reallocate resources from acquisition to customer engagement and driving account profitability. At the same time, we’ve also observed a corresponding shift in fraud patterns from exploiting bonus and referral fraud to account takeover, chargeback fraud, and other kinds of fraud on existing accounts. This necessitated a stronger focus on understanding the nature of identity fraud on the continent. ” – a quote from the Smile ID Fraud in Africa report.
The shift in fraudulent behaviour towards existing accounts means businesses must evolve to protect their service and customers through ongoing risk monitoring and multi-authentication, especially during high-value events. However, companies must ensure that this is not at the expense of user experience.
Topics highlighted in the report include
- The prevalence of fraud with National IDs,
- Regional fraud trends,
- Industry-specific insights,
- Building a comprehensive anti-fraud system
- The growing threat of artificial intelligence to identity verification,
- Future developments in fraud prevention
Some key takeaways are:
- The last four years have seen a consistent increase in fraud rates across Africa
- The average Document and Biometric fraud rate has increased for six consecutive quarters since Q2 2022.
- Fraudsters are evolving towards biometric fraud, with rates reaching a record-high 13% in Q4 2023.
- 80% of ID fraud attacks are concentrated on national identity documents, making them the most exploited ID type.
And lots more.
The Digital Identity Fraud Report is available on Smile ID’s website.
