The stats for digital identity fraud in 2020 were pretty grim while the figures for 2021 are looking equally depressing. 

According to a report produced by Cybersecurity Ventures, the latest predictions show the damage caused by internet fraud could amount to $6 trillion in 2021. 

There’s no doubt that the global COVID-19 pandemic has accelerated digital transformation massively in every industry accompanied by a drastic increase in fraud. 

Between March and June last year – when many countries were in lockdown to ‘flatten the curve’ of the pandemic – there were significant increases in different types of identity fraud attempts.

At IDnow we saw similarity fraud increase by 231%, fake ID fraud increase by 180% and social engineering – for example, fake job offers to encourage the applicant to open a bank account – increase by 75%.

As the landscape of COVID restrictions continues to evolve, it’s clear that the current, decentralised system of digital identity is unfit for the digital age. COVID has highlighted a system that is worryingly inadequate and incredibly complex – one that in its current form, simply cannot cope with online sales and transactions.

Back in 2020, when many organisations struggled to manage the pivot to working from home and carrying on business without face-to-face meetings, a multitude of systems popped up that required users, both in a professional and personal capacity, to provide a lot of highly sensitive and personal data: passports, driving licences, bank statements and utility bills, not to mention a slew of new things such as vaccination certificates, passenger locator forms and QR codes.

With so many moving pieces, it’s clear that this is something that will need a concerted effort from the private sector, combined with the legal and regulatory clout of the UK government and, preferably, a ‘coalition’ of governments around the world. As soon as lockdowns were lifted, our appetite for global trade and travel was undiminished, so it’s essential that we develop systems that work across borders.

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Of course, Brexit is still an issue for the UK, as it is not clear whether we will collaborate with Europe.  The EU has made progress with the new eIDAS 2.0 legislation which will enable EU citizens to have a digital wallet to store documents like ID cards and birth certificates in a fully digital way and use them all over Europe.

We strongly hope that the UK follows this lead or at least takes part in international collaborative arrangements to ensure that there are standards agreed across the board and that we can combine best practice from around the world. 

We should make efforts to follow our European colleagues. UK tech companies should support the government and highlight that this affects everyone and needs urgent action.  

The UN estimates that financial fraud worldwide could be running at $2 trillion – this is an issue that the government can’t afford to ignore.