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The Modern Threat of Democratized Fraud

How technology has made fraud easier and more widespread

In a “chronically online” era, fraud has become frighteningly accessible and increasingly advanced. Gone are the days when committing fraud required a certain level of technical savvy or insider knowledge.

Today, we are witnessing the democratization of fraud—a phenomenon where once advanced tactics are no longer the domain of a few but easily offered to many. Widespread accessibility has been fueled by several factors: the availability of extensive personal data online, user-friendly fraud-committing tools, and instructional content on how to exploit digital systems shared across forums. Not to mention the growing prevalence of review fraud, coupon fraud, and the like.

As a result, the tools and knowledge required to perpetrate these acts are at the fingertips of a broad audience, which means businesses need to reshape how they think about security in the digital age.

Consumer Behavior and Fraud Expansion

What’s fueling this surge? A major factor is the shift in consumer behavior regarding digital identity. As consumers grow more cautious and protective of their personal information, many are taking steps to remain anonymous to protect their privacy online, which often translates into users deliberately modifying personal details. Approximately 32% of people admit to creating a new email address or tweaking their identity for online registrations, indicating a growing comfort with manipulating personal details. These actions inadvertently lower the barriers for fraudulent activities by increasing the ease with which individuals either intentionally or unintentionally participate.

Altering digital identities further complicates verification processes since these pieced-together identities often appear highly credible, making it challenging for businesses — especially in the banking and credit sectors — to accurately identify legitimate customers from fraudsters.

The issue is further complicated by various types of democratized fraud:

  • Synthetic Identity Fraud: Combining various real and fake personal details, synthetic identity fraud creates believable identities that are getting tougher to detect. This type of fraud resulted in potential losses of $3.1 billion for U.S. lenders by the end of 2023, up by 11% from the previous year.
  • Review Fraud: Individuals may use fake identities to influence consumer perception through review platforms. Negative or overly positive fake reviews can significantly impact a business’s reputation and financial standing.
  • Coupon Fraud: Using multiple or fake email addresses to exploit promotional offers repeatedly, coupon fraud causes substantial revenue losses and increases operational costs for businesses.
  • Loyalty Program Fraud: The fastest-growing ecommerce fraud threat facing online marketplaces, fraudsters are exploiting loyalty programs to illegitimately accrue or redeem points, impacting ROI and damaging customer trust.

Each type of fraud comes with unique challenges, and what makes it even trickier is that many consumers might not realize that their actions could be considered fraudulent or that they are contributing to making fraud harder to detect. Lack of awareness can lead to more unintentional fraud, emphasizing the need for businesses to both prevent and educate about these behaviors.

The Numbers and Impact

The statistics surrounding the impact of fraud in the digital age paint a stark picture of the challenges businesses face:

  • Global Reach: The incidence of digital fraud related to new account creations escalated globally to 6.1% in 2023, up from 5.3% the previous year, and synthetic identity fraud is leading this growth.
  • Surge in Account Takeovers: According to a report from Sift, there was a staggering 427% increase in account takeover incidents in the first quarter of 2023 compared to the entirety of 2022. Fraudsters are not only creating new identities but are also increasingly hijacking existing accounts.
  • Fraud-as-a-Service Schemes: Reflecting an even broader trend, Ravelin’s 2023 Fraud Survey revealed that 56% of fraud analysts worldwide have observed fraud-as-a-service schemes targeting their companies, indicating that fraud tactics have become commoditized, with infrastructures in place that allow even less technically skilled individuals to be involved.
  • Industry Vulnerabilities: Certain sectors are more susceptible to these types of fraud, with auto loans experiencing particularly acute challenges. Exposure to synthetic identities in this sector is 90% higher than in the bankcard sector, demonstrating targeted attacks where the potential payoff for fraudsters is significant.

Strategies for Combating Democratized Fraud

As fraud becomes more accessible and sophisticated, businesses must adopt a multi-faceted strategy to counteract threats. Here’s a closer look at a comprehensive approach needed:

  • Technology Innovations: Advancements in technology are at the forefront of combating democratized fraud. Companies like AtData are using Artificial Intelligence (AI) and Machine Learning (ML) to analyze vast amounts of data surrounding email addresses for anomalies that could indicate fraudulent activity. For example, AI systems can monitor new account registrations to detect patterns that match known fraudulent behaviors, such as the use of slightly altered personal details or suspiciously similar email addresses registered within a short timeframe across many different businesses.

    AI tools are also adept at recognizing more subtle signs of synthetic identities, like unusual combinations of age, address, and credit inquiries, which might not be evident to human reviewers.
  • Educational Initiatives: Many consumers might not fully understand the implications of seemingly minor actions, such as using a different email address or slightly altering personal information when signing up for online services. Businesses can implement educational campaigns to inform both consumers and employees about the dangers of these practices.

    For instance, a campaign might illustrate how participating in coupon fraud or altering one’s digital identity can inadvertently aid fraudsters or even lead to personal legal consequences. Workshops, webinars, and online resources can teach users the importance of maintaining consistent and honest digital identities and alert them to the common signs of fraudulent schemes.
  • Industry Collaboration: The complex nature of modern fraud schemes, especially those involving synthetic identities, requires a united front across the industry. Sharing insights, data, and strategies with peers can significantly enhance the effectiveness of fraud prevention measures. For example, banks and credit agencies can share patterns of fraudulent activity they’ve encountered, such as the specifics of synthetic identity fraud trends within certain geographic locations or industries.

    This collaborative approach also extends to participating in broader networks where businesses, regulatory bodies, and technology providers come together to exchange information and update each other on the latest developments in fraud prevention tools and tactics.


The democratization of fraud represents a larger problem as a significant and growing threat to all industries. As technology advances, so do the methods of fraud. In response, businesses need to adapt quickly. AtData is actively working on solutions to meet these challenges, aiming to help businesses protect themselves against the evolving threats in the digital world.

For a deeper dive into this issue, read AtData’s whitepaper on The Impact of Fraud’s Democratization. For more information on how AtData can help your company combat these threats, please visit our Fraud Prevention Page

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Author: Diarmuid Thoma

AtData’s Vice President of Fraud & Data Strategy. Over 20 years of experience designing and working on fraud prevention platforms with large companies including Facebook, Symantec, and Hewlett Packard. Founding member of fraud platform Trustev which was acquired by TransUnion.