The Rise of Fraud and the Need for Self-Sovereign Identity

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20|30 Group
Alex Tweeddale
30
January 2020
The lack of identity verification and trust in digital interactions is, fundamentally, why online fraud is so pervasive. The solution to this must be Self-Sovereign Identity.

By Alex Tweeddale, IDWorks

I read an interesting BBC News article last week which highlighted that there has been a surge in cases of fraud in the UK with the police struggling to cope due to being unable to identify the criminals.  

While overall crime has not dramatically increased, the amount of reported fraud has increased by 500,000 cases in the last year.  

Alarmingly, ex-Met Police Deputy Commissioner Sir Craig Mackey, has suggested that fraud now accounts for one third of all crimes in the UK, yet only 2% of fraudsters are detected.  

To put this into perspective, each day, approximately 2,000 fraud offences are committed, whilst only 1% of police officers will even attempt to investigate the reports.  

The main reason for the proliferation of fraud is because of how easy it is to remain anonymous online. In fact, 86% of all fraud is committed online, and most commonly in the form of a phishing scam.  

It seems to me that the lack of identity verification and trust in digital interactions is, fundamentally, why online fraud is so pervasive. If I want to know, with absolute certainty, who I am transacting with online or giving my account details to, there is presently no clear way for me to see that the recipient is not a fraudster.  

Although most banking websites have secure connections and verified certificates – it still remains easy to impersonate the logins of websites and catch people who are not looking for the secure connection.

For this reason, ex-Met Police Deputy Commissioner Sir Craig Mackey suggested that "fraud investigation in the UK needs a 'new future'."

Our team at IDWorks and our parent company, 20I30 Group, believe that this new future is Self-Sovereign Identity.  

Self-Sovereign Identity (SSI) is a technology which adds a layer of trust to digital interactions. It will enable each internet user to have a digital wallet containing verified identity information. This could be used for example, if an individual is a customer at a bank, and wants to use online banking.  

At the stage of login, the individual will exchange verified credentials with the bank, meaning both parties will know that they are transacting with a legitimate entity rather than a fraudster.  

This could also be used for phone calls from the bank – the bank could send, via a push notification to an individual’s phone, a verified credential exchange link to definitively prove it is the bank.  

According to Barclays’ article ‘identifying the consumers of tomorrow’: “By 2022 it’s predicted that 40% of interactions between businesses and their customers will be affected by a form of digital ID known as self-sovereign identity (SSI).”

If this is the case, the rates of fraud over the next two years, particularly financial fraud, may begin to decline as SSI is slowly adopted across multiple industries.  

Overall, the state of fraud online is only getting worse as more criminals realise that they can ‘operate with impunity’.  

Law at this stage is ineffective because it cannot be enforced.  

As such, an architectural change is needed to be made to the fabric of the internet – adding a layer of trust and security to what is currently a playground for criminals.

Protecting the identities of the public online is a fundamental human right. Businesses need to take action and recognise they need to do more to protect their customers.

We firmly believe 2020 is going to be the year for true deployment of SSI.

Last week we made a number of predictions for SSI in 2020 – to read more, click here.

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