AU10TIX Q3 Global Identity Fraud Report Uncovers 56% Surge in Payment Sector, Correlated with Unprecedented Decline in Crypto

Rhea-AI Summary

AU10TIX (Ticker: A10X) Reports 51% Decrease in Crypto Fraud as EU Regulations Take Effect

Positive

• 51% decrease in crypto fraud due to EU regulations
• Shift of fraud focus from crypto to payments sector
• Rising importance of facial image capture in identity verification

Negative

• 56% increase in fraud in the payments sector
• North America saw highest volume of payment sector attacks
• The actual fraud rate is likely three to 10 times higher than reported

Crypto Sector, Traditionally Ground Zero for Organized Fraud Activity, Sees 51% Decrease in Anticipation of Sweeping EU Regulations

TEL AVIV, Israel, Dec. 13, 2023 /PRNewswire/ -- AU10TIX, a global technology leader in identity verification and management, today released its Q3 2023 Global Identity Fraud Report. Drawing insights from millions of transactions processed across 249 countries from July to September 2023, the report uncovers significant trends in the world of organized identity fraud. Most notably, AU10TIX detected that professional fraud rings have shifted their focus from crypto to the payments sector. Digital payments saw an alarming 56% increase in fraud while the crypto industry, traditionally a sandbox for fraudsters, experienced an unusual 51% drop.

AU10TIX attributes these developments to the June introduction of the EU Market in Crypto-Assets (MiCA) regulation. This legislation will end the 'wild west' era of crypto in the EU by introducing a new regulatory framework designed to protect investors and consumers.

Although the new regulations initially target the EU and will not take effect until 2024, many organizations and regions are proactively adopting stricter KYC guidelines to align with the legislation. This is making it more difficult for professional crime organizations to commit fraud in the crypto sector, so they are funneling their efforts into the less regulated sector of payments.

Among the sectors scrutinized in Q3, the payments sector was the industry most highly targeted by organized fraud groups, responsible for 51% of all financial fraud attacks -- a significant increase from 32% in Q2. In contrast, the crypto industry was responsible for only 23% of attacks, down from 47% in Q2. These findings underscore a clear correlation between regulatory frameworks and the prevalence of fraud.

North America saw the highest volume of payment sector attacks of all regions studied. AU10TIX attributes this to fraudsters continuing to capitalize on the economic recovery and increased spending. APAC was the second most targeted region, which AU10TIX ascribes to rising digital transaction complexity (involving diverse economies and cross-border payments) presenting challenges for identity verification and creating loopholes for fraudsters.

AU10TIX's report also compares the frequency of different fraud modes, including document number, personal data, face picture, image template, and facial image capture (selfie). Across all regions, fraud involving selfie capture represented less than 5% of attacks, indicating that fraudsters find this verification method difficult to circumvent. Gartner also notes that facial image capture is a "must-have" for identity verification vendors.

"The unpleasant truth is that publicly available statistics regarding identity fraud refer only to the attacks that traditional IDV solutions can detect," said Dan Yerushalmi, CEO of AU10TIX. "The actual fraud rate is likely three to 10 times higher, because today's sophisticated attacks are committed by organized crime groups using AI, deep fakes and other technology to create false IDs nearly indistinguishable from the real thing. The financial well-being and reputation of a business may be severely impacted by the rise of sophisticated identity fraud. Our commitment at AU10TIX is unwavering—to contribute to the global reduction of identity fraud and make the world a better place."

The significant surge in payment sector attacks, particularly in North America, highlights the urgent need for robust legislative measures to safeguard consumers from fraudulent activities. Regulatory bodies in the United States and the Asia-Pacific region must proactively create legislation that bolsters consumer protection in the payments industry.

In the absence of stringent regulations, payment providers must elevate their KYC practices to fortify defenses against escalating fraud risks. AU10TIX remains committed to fostering a secure and resilient financial ecosystem and invites stakeholders to collaborate in this critical endeavor.

About AU10TIX 
AU10TIX, a global identity intelligence leader headquartered in Israel, is on a mission to obliterate fraud and further a more secure and inclusive world. The company provides critical, modular solutions to verify and link physical and digital identities so businesses and their customers can confidently connect. Over the past decade, AU10TIX has become the preferred partner of major global brands for customer onboarding and customer verification automation – and continues to work on the edge of what's next for identity's role in society. AU10TIX's proprietary technology provides results in less than 8 seconds, enabling businesses to onboard customers faster while preventing fraud, meeting compliance mandates, and, importantly, promoting trust and safety. AU10TIX is a subsidiary of ICTS International N.V. (OTCQB: ICTSF). For more information, visit AU10TIX.com.

Media Contact:
Mark Prindle
Fusion PR
au10tix@fusionpr.com

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SOURCE AU10TIX LIMITED

FAQ

What did AU10TIX report in Q3 2023?

AU10TIX released its Q3 2023 Global Identity Fraud Report, showing a 51% decrease in crypto fraud and a shift of fraud focus to the payments sector.

What caused the decrease in crypto fraud?

The decrease in crypto fraud is attributed to the introduction of the EU Market in Crypto-Assets (MiCA) regulation.

Which sector saw an increase in fraud?

The payments sector saw a 56% increase in fraud, making it the most highly targeted industry by organized fraud groups.

What are the implications of the report for North America?

North America saw the highest volume of payment sector attacks among all regions studied, indicating the urgent need for robust legislative measures to safeguard consumers.

What is the importance of facial image capture in identity verification?

The report highlights that facial image capture is a 'must-have' for identity verification vendors, indicating its rising importance in fraud prevention.