How Investing in AI-Powered Technology Can Help Prevent Identity Fraud

Identity theft is on the rise, and bad actors are using increasingly sophisticated technologies to disrupt the flow of business. With 69% of businesses confirming an increase in fraudulent activity like digital document forgeries, deepfakes, and synthetic IDs, it’s clear they must adopt new, innovative strategies to fight back. And this is especially true for organizations in highly regulated industries where privacy, security, and compliance are critical.

This article includes the latest intel on how leading organizations are leveraging new AI-powered digital identity verification (IDV) solutions to respond effectively to this growing threat and stay one step ahead of the fraudsters.

Identity theft is growing 

Identity theft is being propelled by a new breed of sophisticated AI-supported attacks.

The U.S. Federal Trade Commission (FTC) received more than 1.1 million reports of identity theft opens in a new tab through its IdentityTheft.gov website in 2024. And in the UK, 421,000 fraud cases were reported to the Cifas National Fraud Database opens in a new tab in 2024, a 12.5% increase from 2023. Identity fraud made up 237,000 of these cases, accounting for 64% of all reports. 

According to Entrust’s 2025 Identity Fraud Report, opens in a new tab digital document forgeries, often created with generative AI, increased 244% in the past year. Deepfakes like these forgeries now account for 40% of all biometric fraud. 

The challenge for companies in highly-regulated industries that deal with sensitive data lies in threading the needle between effectively combating this rising tide of identity fraud, while also meeting their customers’ expectations for an outstanding digital/user experience.

AI is a remarkable technology that can help organizations meet this goal, and it’s increasingly being integrated into digital identity verification solutions.

According to research from Entrust and Docusign, while 46% of respondents believe that their customers will be frustrated or upset if they adopt AI as part of their identity verification process, nearly 6 in 10 (59%) agree that they will see significantly more fraud if they don’t embrace this emerging technology.

A large majority of businesses see AI as a critical tool to stem the rising tide of identity fraud: 82% of decision-making respondents believe AI will be more effective than their current methods of authenticating and verifying users and reducing customer fraud risk.

How AI supercharges identity verification

Organizations across many industries are integrating AI into digital identity verification solutions to make them more secure, efficient, and personalized. These solutions are particularly adept at fighting highly sophisticated, AI-enabled fraud because they can adapt, scale, and detect patterns that humans or traditional rule-based systems often miss.

AI models learn from huge datasets and can spot subtle indicators of fraud, including mismatched facial features, inconsistent lighting in ID photos, or behavioral anomalies—subtle clues that human reviewers may easily miss.

AI is one of the most effective ways to detect emerging threats like deepfakes because it can effectively analyze micro-expressions, eye movements, and texture inconsistencies. In addition, AI is adept at identifying synthetic identities and flagging when a user profile is statistically “too perfect” or inconsistently built across data points.

Unlike static fraud detection rules, AI models continuously learn and improve from emerging fraud schemes. If a new type of attack emerges, such as deepfake video submissions, the system can be retrained or finetuned to recognize and respond to the threat faster than manual teams can react. This is why it’s so important to work with vendors committed to regularly improving their models.

AI also offers a more cohesive and convenient user experience than traditional manual detection methods. AI can verify legitimate users faster and more accurately, reducing unnecessary friction. For example, AI-enabled verification methods can be designed to detect fake webcams or emulators and deepfakes.

Leading businesses invest in advanced technology to fight fraud

Successful organizations are learning that the best way to mitigate the financial risk of identity fraud is by investing heavily in the latest technology. Research from Entrust and Docusign finds that organizations that invest more in IDV compared with their peers experience 37% higher levels of satisfaction with these solutions. Just as critically, organizations that use IDV detect identity fraud earlier and in 20% more stages of the customer journey than organizations that do not use IDV. AI is at the forefront of identity fraud detection and monitoring, and organizations should explore options that include this technology today.

To meet the stringent requirements of an effective anti-fraud program, your digital identity verification solution must be:

• Secure and user-friendly: It must deliver the most secure agreement process, without compromising on user experience.

• Compliant: It must meet or exceed stringent compliance standards, such as KYC and AML, FINTRAC, eIDAS, and other regulations, as applicable to your country, region, and industry.

• Scalable: It must maintain a consistent level of security for your agreements as your business grows.

• Sophisticated: It must keep ahead of fraudsters by using AI-powered solutions that rapidly learn and adapt to the latest threats.

Docusign Identify offers a range of modern identity verification and authentication solutions that are fully integrated into any agreement workflow, making it easier to reduce identity fraud by boosting security, meeting compliance requirements, and simplifying the digital experience for all participants.

With advanced technologies such as Risk-Based Verification (available in H2 2025), Liveness Detection, automated identity document verification, phone and SMS authentication, and knowledge-based authentication (KBA), Docusign helps organizations ensure that only intended recipients can access, review, and complete important agreements.

The best fraud measures do not compromise on user experience. IDV can complement the customer experience and enhance brand reputation, while ensuring that fraud is detected and mitigated early in the process.

Rather than spending valuable resources on costly, reactive measures such as buying insurance or hiring additional staff, investing in AI-powered IDV solutions offers businesses the best advantage in fighting identity fraud—especially today’s sophisticated, AI-powered threats. 

With Docusign Identify, protecting your business’s processes, agreements, and customer data from identity fraud while streamlining key business workflows has never been easier.

Looking ahead

The future of identity verification is being reshaped by a powerful mix of AI, biometrics, decentralized technologies, and behavioral analysis. The dual mission of these emerging solutions is to keep one step ahead of increasingly sophisticated, AI-enhanced fraud schemes that can produce remarkably convincing deepfakes and synthetic identities, while maintaining a positive customer experience. Privacy and regulatory compliance are also top concerns among organizations.

Here are a few of the latest technologies that are marching to the forefront of identity fraud detection:

• Biometric authentication 2.0: The use of biometrics, such as fingerprinting, voice, and retinal/iris scans, is already prevalent in identity verification. The next phase of prevention will see two or more of these techniques combined into multimodal biometric authentication, making such techniques more accurate and difficult to spoof. Touchless and passive biometrics, such as facial recognition from video and gait analysis, will also emerge as effective, low-friction modes of authentication.

• Decentralized identity (DID): With DID, individuals control their own digital identities through verifiable credentials stored on the blockchain. This will reduce reliance on centralized databases, which are attractive targets for fraudsters.

• Behavioral biometrics: In contrast with more conventional biometrics like fingerprinting and facial recognition, behavioral biometrics authenticate users based on the unique style of movements (e.g., typing, swiping, scrolling) they make on their devices. Since behavioral biometrics run in the background, they’re transparent to the user and difficult to mimic.

• Digital IDs: Governments and private providers worldwide have begun to introduce digital identification cards such as driver’s licenses or national IDs, which citizens can store securely on their mobile devices. Examples include the Apple Wallet driver’s license introduced in some U.S. states, the EU’s Digital Identity Wallet (EUDI)  initiative, and Docusign Identity Wallets.

Identity fraud is a very real threat. Solutions like Docusign Identify leverage the power of AI to create secure, customized, and flexible agreement experiences from start to finish. They represent the vanguard of effective identity fraud prevention.