Expert Tips for Preventing Fraud Across the Customer Lifecycle
Identity fraud is no longer confined to isolated attacks—it’s a persistent, evolving threat that targets the most vulnerable stages of your customer lifecycle. This eBook unpacks how and where identity fraud happens, what forms it most commonly takes, and what leaders can do to stay ahead of increasingly sophisticated attackers.
With fraud-related losses in the U.S. surging from $3.5 billion in 2019 to $12.5 billion in 2023 opens in a new tab—and likely far higher when adjusted for underreporting—it's clear that relying on traditional defenses like usernames and passwords is no longer adequate to address this rising threat.
Fraud and identity theft are growing
For U.S. companies, fraud and identity theft losses are growing at an alarming rate. Between 2019 and 2023, reported fraud and identity theft in the U.S. grew by a factor of 1.4x (from 2.5 million to 3.6 million incidents). Add in the reported financial fraud losses of $3.5 billion in 2019 to $12.5 billion in 2023 mentioned earlier, and it’s clear the Banking and Finance industry has been the most directly impacted by identity fraud, while professional services businesses were impacted the most indirectly.
Yet, these figures don’t tell the entire story. Adjusting for underreporting, the Federal Trade Commission estimates that total U.S. consumer financial losses from fraud may have been as high as $158.3 billion in 2023.
Identity fraud occurs throughout the customer journey, but research from Docusign and Entrust shows that it most often occurs in the early stages of customer login and payment authorization. It also comes in many varieties. The most common methods of attack across industries are identity theft, account creation, digital document forgery, and chargeback fraud.
An exploration of organizational behavior reveals that two-thirds of organizations apply different levels of authentication for each customer interaction, based on either their customers' risk profiles or the type of interaction. The authentication method linked with the most identity fraud is username and password, but even multi-factor authentication (MFA) isn't sufficient to protect against increasingly sophisticated identity fraud attempts, particularly those augmented through generative identities, like deepfakes and synthetic document forgery. The use of advanced, AI-enabled forms of IDV—such as biometric authentication, document verification, and risk-based verification—is essential to stay ahead of fraudsters.
Tips from the experts
The current fraud and identity theft landscape is undoubtedly challenging and fraught with peril. If your organization is looking to enhance or augment your existing identity verification strategy, fraud prevention experts recommend taking these initial steps:
#1 Regularly assess your entire, end-to-end identity verification flow
It’s important to spend time analyzing each stage of your current identity verification process, including every customer touchpoint. The typical steps include customer data entry, identity document upload, biometric checks (if applicable), automated or manual risk assessments, decision logic, document and data storage, and post-verification handling and audit trails. Vulnerabilities often lie in the gaps or weakest links between steps.
#2 Stress-test existing systems
Experts recommend conducting regular system tests using tried-and-true methods like red team exercises, simulated fraud attempts, penetration testing, and even employing ethical hackers. These approaches are quite effective at unearthing a wide range of fraud schemes, including:
Deepfakes or spoofed selfies
Edited or forged documents (using popular third-party software)
Synthetic identities (i.e., completely fake, but valid-looking personas)
#3 Monitor for shifts in fraud patterns
It’s important to maintain constant vigilance of emerging fraud trends by analyzing critical real-time data, including:
The time or day of the week the fraud occurs
Mismatch between IP address and geolocation
Repeated attacks coming from the same device, organization, or email
Automated or manual risk assessments that are baked into your fraud-mitigation strategy can help highlight where and how your businesses may be prone to fraudulent or suspicious transactions or interactions.
#4 Conduct thorough vendor due diligence
Don’t assume your current provider offers the latest fraud mitigation capabilities. You should evaluate your existing vendors every year, and ask them:
Which fraud scenarios are you prepared for?
Which detection methods do you use (e.g., AI, biometrics, machine learning, external database checks)?
Do you have dedicated teams focused on updating your models, and how frequently are they updated?
Also, make sure to verify your vendors’ current certifications to ensure they’re in full compliance with the latest data security and privacy standards like ISO 27001, SOC 2, FINTRAC, and GDPR.
It’s important to focus your initial efforts on the weakest stages of the identity verification process, as outlined above. We also recommend working with a qualified team to map out your own customers’ journeys and identify where your specific business faces the most risk.
The competitive advantage of modern IDV solutions
Modern digital IDV offers several compelling advantages over legacy fraud prevention methods. As part of a well-crafted fraud mitigation program, IDV is a powerful line of defense for organizations in preventing identity fraud and offers businesses a competitive advantage versus organizations that don’t use such advanced AI-supported methods.
First, IDV users detect identity fraud much earlier in the customer journey and more frequently than non-users. For example, organizations that use IDV, on average, catch identity fraud attempts in 20% more stages of the customer journey than non-users.
As a result, the average organization using IDV has saved over $8 million in identity fraud costs.
Additionally, organizations that report investing significantly more than their peers in IDV are:
2.2 times more likely to have saved over $1 million than those who invested the same or less than their peers
1.7 times more likely to have successfully reduced a significant amount of identity fraud
2.7 times more likely to believe they have a competitive advantage
2.8 times more likely to plan to invest more in IDV
Seventy percent of organizations surveyed believe investing heavily in technology solutions is the best way to mitigate the financial risk of identity fraud, and IDV is one of their top priorities, with 74% planning to invest more in IDV in the future.
This is why 63% of organizations that invested significantly more in IDV than their industry peers believe the steps they took to prevent identity fraud had a positive impact on their brand.
Younger leaders, in particular, are convinced of the role emerging technologies play in fighting fraud. For example, organizational leaders who are millennials or Gen Z believe biometrics are an important part of online authentication. According to research from IDEX Biometrics opens in a new tab, 47% of this demographic used biometric security methods in the past month. Out of that group, 52% prefer biometric authentication to other methods.
Advanced IDV you can trust
Docusign Identify is the missing piece in your agreement workflow, offering straightforward identity verification you can trust. It allows organizations to:
Combat rising instances of identity fraud: Docusign’s modern IDV and authentication solutions make it easier to reduce identity fraud, boost security, and support compliance obligations.
Leverage the most advanced technologies: AI-powered biometric checks, automated identity document verification, integrations with third-party identity verification providers such as CLEAR opens in a new tab, and knowledge-based authentication (KBA) are just some of the ways Docusign helps ensure that only the intended people can access your important agreements without impacting the digital experience.
Customize workflows to suit your needs: As part of the Docusign IAM platform, Identify allows you to customize exactly when and where identity checks should take place within any workflow
Identity theft and fraud are a growing threat worldwide. With Docusign Identify, protecting your business’s processes, agreements, and customer data from identity fraud while streamlining key business processes has never been easier. It helps keep your digital interactions secure and trusted—all without impacting the user experience.