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Digital nomad trend contributes to increasing identity fraud: report

Digital nomad trend contributes to increasing identity fraud: report

Regula‘s Identity Verification in a Globalized World report reveals findings from surveys of 750 digital nomads and 750 fraud prevention decision makers from around the world on how businesses are verifying nomads’ identities and how nomads feel going through ID verification processes as they move to new locations.

The phenomenon of digital nomads has spread significantly in recent years, with 17 million people identifying themselves as digital nomads in the U.S. alone, growing more than double the size between 2019 to 2023. Here are the report’s key findings.

Eighty percent of businesses noticed a recent increase in identity fraud, which they directly associated with the growth of international business.

They’re turning to biometric and document verification to fight back, with 57 percent of businesses already having biometric verification implemented, 53 percent using e-document verification, and 39 percent using blockchain-based identity verification. Other tools include behavioral biometrics (41 percent) and digital ID wallets (49 percent). Another third of those surveyed plan to implement each option in one year’s time.

Security and privacy are a top concern for businesses and nomads alike. Digital nomads identified three major risks with the association of identity verification. They worry that their IDs may become lost or stolen, that their identity data is at risk, and that conducting identity verification on public Wi-Fi could further expose them to cybersecurity risks. They also face frustration with internet availability and with what documents are accepted.

Digital nomads identified the most difficult and user-friendly scenarios when attempting to verify identity with foreign documents. Top scenarios in each category differed by country. The most frustrating scenario in Spain was conducting financial transactions, while in the UK it was opening a bank account and in the UAE applying for a visa was the most difficult.

The most user-friendly scenario in Mexico, Spain, and the UK was checking into a hotel. In the UAE, the most accessible scenario was opening a bank account, and in the U.S., hotel check-in and opening a bank account tied for the top spot.

The U.S. is the most frustrating country for ID verification for foreign passports, followed by UAE. Germany has the most seamless ID verification processes for foreigners.

The most common issues digital nomads come across during identity verification all have to do with validity. Documents can expire, and those abroad can’t easily renew them. Proof of residency is another challenge for those without a fixed address. PII may also be inconsistent across documents. Overall, these inconsistencies hurt the credibility of nomads seeking validity.

These struggles present more in some countries than others. One fourth of nomads struggle with proof of residency in the UAE, but only 12 percent struggle in the UK.

Most businesses–92 percent– have seen an increase in foreign document verification cases. U.S. passports were used in 34 percent of ID verification cases abroad, making them the most common scenario for foreign cases.

Businesses in the UAE face the most diversity in the foreign IDs they face. Its neighboring country– Saudi Arabia – relies heavily on foreign residents in their workforce.

Businesses face issues with the lack of unified document standards among foreign document types, with 41 percent calling it a primary challenge. Other major hurdles include the surge of fraud (40 percent), language barriers (36 percent) and internal expertise (32 percent).

Regula provides a number of recommendations to overcome obstacles in the digital nomad IDV landscape. By extending the list of supported documents, enacting remote identity verification options, and providing services in more languages, businesses and nomads can overcome the frustrations associated with ID verification.

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