GP Report

Aadesh

Main topic: Digital World

Research question: How effective are current digital identity verification systems in preventing fraud
in cross-border transactions, and what improvements could reduce global identity theft?

With international trading going digital and the heightened need to secure one's identity online—
compounded through international transactions—identity verification is key. The ease of
international trading online since the pandemic softened global borders was evidenced by the 25%
increase in online fraud attempts in 2021 (GBG, "What is Identity Proofing and How Can It Help
Prevent Fraud?"). This is a research project because digital identity verification options must be
assessed to determine their efficacy in reducing fraud during international transactions. Findings will
be evaluated to understand how these options can be improved for greater access to goods and
services worldwide. International Aspect No matter where you are in the world, your next line of
protection against fraud is digital identity verification. Whether it's biometric scanning, behavioral
analysis, or device fingerprinting, you can create a safe digital environment for transactions. One
such company is Plaid, which uses behavioral analysis algorithms and device fingerprinting to not
only see how people interact with their accounts/devices but over time, assess a trend line to
determine when said activity might be fraudulent. These innovations understand what security could
do to enhance. But such verification doesn't always succeed. Criminals have advanced, figuring out
how to game the system—fake IDs and even deepfakes are now part of the online security dodging
landscape. As detailed in "Digital Identity Verification: The Complete Guide" by Regula Forensics, this
type of identity-related crime has grown more common over time. Therefore, IC verification by banks
and online merchants requires a more extensive layered approach using both tried-and-true and
modern methods to fortify the line of defense and minimize susceptibility to crime. According to
Juniper Research, global losses due to online payment fraud will surpass $48 billion by 2023.
Therefore, there is an additional incentive for this form of identity verification to only get better over
time. Moreover, the technology could be even more effective once Artificial Intelligence and Machine
Learning become the norm; AI and ML can assess data trends and findings at a significantly quicker
pace than a human being, recognizing discrepancies that a human agent may overlook. Local
Perspective (India) Similar tools are employed across India. Ever since the digital payment and e-
commerce platforms took off in India, it appears that the digital identity verification systems are on
the rise for implementation. For instance, FinTech companies need digital identity verification
systems to ensure compliance with KYC and AML regulations. When individuals have their identities
authenticated and verified, they are less susceptible to scams and identity theft. Yet, survey results
show that many are still confused in India about whether personal data is compromised, how long
data is stored, and if data is shared with third-party non-vendors. Similar to the United States, where
no regulations are on the books but all companies have the potential to check. It's out of mind due to
good reputations. Where consumer education can assist, for those under an identity verification
system, it can calm the nerves of people giving sensitive information or at least better inform them if
seeking alternative methods. Furthermore, India's dense population assists and hinders the systems
of implementation. For those in more urban areas, they might like the fact that many people support
a company—and subsequently support its identity verification system. Yet, for those without access
—these rural areas/communities—to cellular networks/technology grant citizenships without
recourse a seminar option for identity verification system opportunities. Cheap and quick options
here would go a long way for this population who often get blindsided by fraud due to few options.
But such systems are not always successfully implemented, however, where technology is not as
accessible. For instance, large urban centres are filled with internet and technological access that
facilitate the successful implementation of such systems. In contrast, small towns rife with rural
centres struggle with sporadic access to broadband lines and lower rates of digital literacy that
hinder citizens from using such verification systems. Yet it appears such a vulnerable population
could benefit from such learning opportunities as new findings indicate that rural populations are
more susceptible to identity theft and scams due to their limited access to education and technology.
Thus, learning opportunities to teach rural populations about digital literacy and safety should be
established by government agencies, private sector companies, and NGOs. International
collaboration could also be beneficial. Global standards for identity verification could simplify
international transactions while minimizing fraudulent opportunities. Countries can band together to
develop a global identity that serves as an ID in more than one country and a protective measure
against fraud across international lines. Lastly, ongoing efforts for public awareness are crucial.
Government and private sector initiatives should have outreach to teach persons about possible
breaches and how to prevent them. In addition, new biometrics—from fingerprinting to voice
printing to even behavioral biometrics—create another layer of protection without hindering UX.
Regular audits and compliance; identity verification solutions are regularly audited through financial
institutions to stay in compliance with issues and the most adjustments to new vulnerabilities.
Ultimately, while current solutions for validating digital identity contribute to the prevention of
identity theft in cross-border transactions, a few things are still needed. If all stakeholders implement
blockchain for transparency, cross-border international wire transfers to establish a regulatory
framework for payment awareness, user awareness micro-training to recognize safe digital
precautions, biometrics for additional validation, and compliance with audits, when necessary,
incidents of identity fraud and theft of personally identifiable information across international
boundaries should be reduced. Where criminals have taken advantage of technology for their gain,
so should technological advancements for the prevention of identity theft. In conclusion, although
the need for a new, digitally savvy identity verification system to reduce fraudulent activity during
international transactions is crucial, it's quite problematic. Potential solutions that reduce the ease of
international identity fraud are the use of blockchain for identity verification, establishment of
international regulatory standards, increased education and awareness for digital safety, the use of
biometrics for identification, and increased compliance standards; however, this is an ongoing
problem that requires international cooperation as so many of the offenders work internationally.
Source

1. https://hyperverge.co/blog/types-of-identity-theft/

2. https://akitra.com/the-future-of-identity-theft-protecting-your-digital-dna/

3. https://www.gbgplc.com/en/

4. https://www.idenfy.com/blog/identity-theft-prevention/

5. https://www.prove.com/blog/what-is-digital-identity-verification