Is identity theft something businesses can afford to overlook? Is identity fraud just a minor risk that comes with operating a business online, or is it serious enough to shake the very foundation of a business? There’s been a lot of debate around this, and today, we’re setting the record straight.
As we move deeper into the 21st century, one thing is clear: no form of fraud is small or dismissible. Identity theft, often underestimated as a fringe concern, has evolved into a growing business threat. Identity fraud is one of those threats that often serves as the foundation for larger, more damaging fraud. It paves the way for fraudsters to get close enough to deliver a significant blow, one that’s often hard to recover from.
For example, a stolen identity can be used to create fake merchant accounts or gain access to business systems, eventually leading to large-scale financial theft or data breaches. This means that identity theft is a threat serious enough for digital-first businesses to make identity theft protection a top priority.
In this article, we will learn about identity theft protection, how it works, and why businesses need it. Let's begin with the definition.
What Is Identity Theft Protection (ITP)?
Identity theft protection refers to the process of detecting, preventing, and mitigating the misuse of identity on digital platforms.
To spot identity theft on a digital platform, businesses look for signs like multiple accounts being accessed from the same device, logins from unusual locations, sudden changes in user details, high-value or irregular transactions, failed verification attempts, and inconsistent device or browser fingerprints.
Proactive user authentication tools and fraud detection strategies, such as device and browser fingerprinting, behavioral analytics, and account risk scoring, come in handy to identify users with fake or fabricated identities.
Why Digital Businesses Need Identity Theft Protection?
Identity theft is a serious concern for digital businesses, as platforms infiltrated by fake users quickly lose trust. Today’s users are highly sensitive about data protection and will often choose a platform that offers fewer features or even comes at a higher cost over one that exposes them to identity risks.
Last year (2024), identity theft and related scams cost Americans an estimated $47 billion, according to a joint report by AARP and Javelin Strategy & Research. That’s a $4 billion increase from 2023, with $27 billion lost to traditional identity fraud and another $20 billion to scam-based schemes.
That’s what makes identity theft protection vital for digital businesses, to prevent consequences like fake signups, account takeovers, promo abuse, and financial fraud (especially on platforms involving money transactions).
The cost of overlooking identity fraud on digital platforms includes revenue loss, chargebacks, customer churn, regulatory fines, and irreversible damage to brand reputation.
Best Practices for Implementing Identity Theft Protection on Digital Platforms:
Use layered protection
Bad actors are smart and constantly find ways to evade detection. Digital platforms must not rely on a single verification method but instead adopt a multi-layered approach covering device, behavioral, and identity signals before approving a user as genuine.
Monitor at every touchpoint
Fraud is often committed by users who appear genuine, as fraudsters typically mimic legitimate behavior before making a move. Digital businesses must monitor user interactions at every touchpoint, especially during sign-up, login, and payment, to improve the chances of identifying suspicious activity.
Balance security and UX
Asking users to verify their identity every time they take an action can lead to frustration and user aggression. Digital businesses must prioritize user experience, minimize friction for genuine users, and adopt fraud detection solutions that work discreetly, operating continuously in the background and only intervening when a real threat is detected.
Choose scalable solutions
Fraud threats vary by industry, location, demographics, and significantly with business size or growth stage. Businesses must understand that while they may currently face only identity theft or similar small threats, expanding operations often bring more complex and severe fraud risks. A solution that can scale and adapt without heavy maintenance as the business grows is ideal.
Go for 3rd party
Fraud prevention solutions require continuous updates and improvements to keep pace with evolving business needs and industry trends—something that demands significant resources. Businesses should avoid building in-house solutions unless they can commit to long-term support. A third-party solution that seamlessly integrates with existing teams and processes is the smarter choice.
Identity theft protection isn’t optional — but building it in-house is.
Leverage expert-built, plug-and-play identity theft protection solutions to protect your users, your revenue, and your brand - visit here.
Best Identity Theft Protection Solution - SHIELD
SHIELD is an intelligent fraud prevention solution powered by adaptive AI and machine learning that stops fraud at its root.
What makes SHIELD the best identity theft protection solution is its ultra-resistant Device ID, which uniquely identifies devices across app and web platforms with over 99.9% accuracy. It acts as a nightmare for fraudsters using fake or manipulated identities, accurately pinpointing devices even after factory resets or advanced tampering. In short, with SHIELD in action, fraudsters can’t hide their true identity.
SHIELD empowers hundreds of digital businesses worldwide to detect fake accounts and multi-accounting at the source, ensuring that no foul play goes unnoticed.
If you’re ready to protect your business with SHIELD, book a demo or explore our platform to see how it works in action.
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