‘Why identity fraud is rising in Nigeria, others’
11 December 2024 |
3:43 am
Identity fraud is a growing problem in Nigeria and other parts of Africa, costing businesses millions yearly. The 2024 Digital Identity Fraud in Africa Report revealed that as more financial transactions and commerce move online,
Identity fraud is a growing problem in Nigeria and other parts of Africa, costing businesses millions yearly. The 2024 Digital Identity Fraud in Africa Report revealed that as more financial transactions and commerce move online, verification of individuals’ identities is paramount to reducing deception and criminal activities.
With over 100 million identity checks conducted by Smile ID, identity verification not only helps businesses to meet legal requirements, but it is also a key defence mechanism, as customers, who undergo the process are statistically less likely to engage in fraudulent activities.
The 63-page report, among other findings, found that businesses that rely on textual verification alone are four times more likely to be defrauded than their counterparts that use biometrics. It said fraudsters are evolving their tactics, revealing that Q4 2023 saw a record high of 13 per cent of biometric verification attempts marked as fraudulent.
According to it, 80 per cent of fraud attacks on the continent are concentrated on national ID cards, making them Africa’s most attacked document type. It was observed that gender inclusion is rising across all African regions as the percentage of women verified has increased from 10 per cent in 2019 to 35 per cent in 2023.
Smile ID noted that transaction fraud is rising, necessitating multi-factor authentication across the entire customer lifecycle. Compared to APIs, the report said SDKs are better suited for ID verification in Africa because they can be engineered with regional considerations in mind. It said 87 per cent of biometric fraud caught is due to active checks showing that selfies alone are insufficient.
According to it, the payments industry suffered significant levels of fraud in 2023 with fraudulent verification attempts reaching as much as 42 per cent in February and 35 per cent in August.
The report noted that for businesses looking to expand across Africa, it is crucial to recognise the unique landscape of identity fraud within this region, saying, unlike other parts of the world, the trends and methodologies of identity fraud in Africa are distinct and complex, shaped by a combination of socioeconomic factors, regional variances, and technological disparities.
Smile ID said in the battle against fraud (identity or financial), biometrics is a non-negotiable tool, much more so in Africa, where the foundations of digital identity are still taking root. This evolving dynamic presents a unique opportunity for companies operating in the continent.
It noted that while navigating the diverse regulatory environment, businesses must leverage biometric technologies to enhance their fraud prevention strategies.
“Biometric systems, being more complex to falsify and closely tied to individual identities, offer a more secure and reliable verification method. Implementing biometric solutions not only aligns with the global trend towards enhanced digital security but also addresses the challenges faced in the African context, such as a high rate of identity fraud and a significant number of unbanked individuals. Businesses that adopt biometric verification systems are complying with emerging regulations and positioning themselves as trustworthy and forward-thinking entities,” it stated.
The report submitted that mobile-first authentication is a priority. It said Africa is becoming an increasingly digital continent led by the proliferation of mobile phones. In 2023, there were an estimated 451 million smartphone subscriptions in Sub-Saharan Africa alone; that number is expected to reach 632 million in 2028.
Smile ID said many of Africa’s digital subscribers use smartphones as a primary gateway to access the Internet and essential services like banking, etc. With this, it said businesses need to meet African users where they are with self-serve mobile-first authentication as a priority.
“Although the agent-led approach may be useful, especially in rural regions with poor technology access, it can be fraught with challenges, including customers sharing personal information with agents who may sell it or use it for fraud.
“A self-serve mobile-first authentication approach means that customers have the autonomy and security to verify their identity through their smartphones. This approach aligns with the growing preference among African consumers for digital solutions that offer convenience, speed, and security,” it stated.
The report noted that as fraudsters become more sophisticated, so will the AI-driven technologies designed to thwart them. It said AI will enable the constant monitoring of user activities and transactions, providing real-time alerts for suspicious behaviours and potential fraud.
According to him, this level of vigilance is crucial in the fast-paced digital world where threats can emerge rapidly. It said by analysing patterns in user behaviour, AI systems can identify deviations that may indicate fraudulent activities, offering an additional layer of security.
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