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Africa needs biometric de-duplication, Smile Identity argues

Africa needs biometric de-duplication, Smile Identity argues

Nobody loves an enticing promotional customer campaign more than an accomplished identity fraudster. That is as true in Africa as anywhere else.

A continent-spanning report, written by KYC vendor Smile Identity and based on its own anonymized transaction data, indicates that duplication fraud is an emerging threat.

Duplication fraud accounted for about 10 percent of the transaction fraud seen by Smile Identity in the last year.

It is growing in large part because companies are entering the African market; they could be domestic startups or foreign-based. Executives are trying to buy market share with promotions, and that is leading to duplication attacks.

Smile Identity finds two methods of duplication fraud most prevalent.

The first is serial submitters, people who use an identity repeatedly to collect on a reward. Minimizing these losses is as simple as limiting signups or checking to see if IDs have been used before.

Database infiltrators are more dangerous. They have gotten access to authority databases. The fraudster creates as many apparently genuine identities as they want. The company says face biometrics is ineffective against these attacks.

There are larger fraud dangers plaguing the world, but duplication fraud can have outsized economic impact, and biometrics can have an equally disproportionate effect on curbing it.

According to the report, “This fraud can only be caught using biometric de-duplication.”

Plus, addressing duplication fraud now would be a better investment than trying to contain it later.

Looking at identity fraud as a whole in Africa, the picture is not as bad as it is in other regions of the world. The payoff-to-effort ratio dissuades large-scale ID fraud.

Smile Identity says that began changing during the pandemic. Fraud attempts grew 17 percent comparing 2019 to 2020 and 20 percent from 2020 to 2021. It grew 26 percent comparing all of 2021 to just the first half of this year.

Fraudulent KYC checks included biometric fraud and data validation errors when comparing to government ID databases.

Unless addressed, identity, including biometric, fraud is going to grow because the amount of money at stake is growing.

According to a 2020 Google report, Africa’s internet economy is on its way to $180 billion by 2025, when it will represent 5.2 percent of the continent’s gross domestic product.

African companies like ID verification vendor Identitypass are operating on the assumption that conventional data infrastructure is a long way off for Africa. The startup is building systems designed for the unique environments found there.

In fact, Identitypass began as Identitypay, using biometrics and ID cards for commercial transactions. Executives found out during their pilot that they could not succeed because there was no verification infrastructure.

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