For many years now, we have been talking about digital identity. The core is how to prove you are you. You have to be identified, verified, authenticated and approved. You would think with so many layers of monitoring access that everyone online in the financial system could be trusted. So, how come there are criminals, fakes and scammers on every corner?
The thing that is really challenging is that the criminals, fakes and scammers seem to be getting stronger, thanks to technology. Talking with bank fraud managers, their aim is to minimise such activity, but they accept they cannot stop it. They talk about an acceptable level of loss. How much is that? One percent? Two percent? How about five percent or more.
According to SEON, a fraud prevention company, businesses lose five percent of their annual revenues to fraud with worldwide fraud costing $5.13 trillion a year, up 56 percent over the last decade.
That’s businesses. What about consumers?
In 2023, people in the UK lost over £1.17 billion to fraud, including scams and payment fraud. This was a 4% decrease from 2022. What types of fraud?
- Purchase scams: 156,000 cases were recorded, resulting in a loss of £85.9 million
- Romance scams: victims were tricked into believing they were in a relationship, resulting in a loss of £36.5 million
- Unauthorised transactions: resulted in a loss of £708.7 million
According to the Global Anti-Scam Alliance (GASA), people lost over $1 trillion to scams in 2024. This is a staggering amount that could fund infrastructure projects or a small country’s GDP.
So, global fraud and scams are costing at least $6 trillion a year or maybe more.
In context, global GDP is just over $100 trillion but this does mean that one in every twenty transactions is fraudulent … and it’s going to get worse thanks to AI.
There are many examples, but my favourite recent one is the sad case of a French lady who fell in love with Brad Pitt, and gave him a million dollars. What? Yep, she thought she was dating Brad Pitt and gave him a million. Here’s the story:
Interior designer Anne, 53, thought she was in a relationship with Pitt for a year and a half.
Anne said her ordeal began when she downloaded Instagram in February 2023, when she was still married to a wealthy entrepreneur.
She was immediately contacted by someone who said they were Pitt’s mother, Jane Etta, who told Anne her son “needed a woman just like her”.
Somebody purporting to be Pitt got in touch the next day, which set off alarm bells for Anne. “But as someone who isn’t very used to social media, I didn’t really know what was happening to me,” she said.
At one point, “Brad Pitt” said he tried to send her luxury gifts but that he was unable to pay customs on them as his bank accounts were frozen due to his divorce proceedings with actor Angelina Jolie, prompting Anne to transfer €9000 to the scammers.
“Like a fool, I paid… Every time I doubted him, he managed to dissipate my doubts,” she said.
The requests for money ramped up when the fake Pitt told Anne he needed cash to pay for kidney cancer treatment, sending her multiple AI-generated photos of Brad Pitt in a hospital bed. “I looked those photos up on the internet but couldn’t find them so I thought that meant he had taken those selfies just for me,” she said.
Meanwhile, Anne and her husband divorced, and she was awarded €775,000 – all of which went to the scammers.
“I told myself I was maybe saving a man’s life,” Anne said.
The story became a Netflix documentary and Brad Pitt personally apologised to Anne, saying that it was “awful that scammers take advantage of fans’ strong connection with celebrities” and that people shouldn’t respond to unsolicited online outreach “specially from actors who have no social media presence”.
The whole thing centres around the growth of AI, deep fake fraud and the ability to make anything you want look like anything you want online. No-one knows you’re a dog online.
This is the key: how can you prove you are you?
If anyone can pretend to be anything on your mobile, social network, computer or other digital devices, how can you prove you are you? You can have all the fraud protection systems in the world in place but, if a criminal can work out a way to find a weakness, then I guarantee they will. Therefore, the criticality becomes digital identities that are fraud-free, secure and 100% bulletproof from hackers, scammers and criminals, to ensure that when you say you are you, you can prove you are you.
This is a tall ask and one we have been grappling with since time immerorial. After all, for every 19 people who walk into a bank, there always be #20 who is a criminal. That’s why fraud is around five percent of global GDP and why, when you ask me who are you? the answer may be a little bit vague.
The key is to remember that anyone you deal with digitally may not be that person. After all, no one knows you’re a dog on the internet.
