DM Jan-Feb 2024

Dm MANAGEMENT: DOCUMENT FRAUD
Combatting document fraud with AI-enabled IDP
Nicos Vekiarides, founder
and CEO of Attestiv,
examines the growth in
document fraud and
explains how AI is being
used by both sides in the
fight for document security
Document fraud is as old as the
written word. The ancient
Romans had laws as early as 80
B.C. prohibiting forgery and falsification
of documents in land transfers. We still
deal with forged documents and fraud
today, but technology makes identifying
fraudulent documents and paperwork
harder. The solution is to apply more
sophisticated technology, such as fraudresilient
intelligent document
processing (IDP), to identify altered and
bogus documents.
Artificial intelligence has made it easier
for criminals to generate credible
forgeries. News stories about deepfakes -
high-fidelity forgeries of audio and video
images used to embarrass a politician or
public figure - involve the same AI
technology being used to counterfeit
documents. AI algorithms can imitate
details of documents such as
watermarks, holograms, microprinting,
signatures and images, making detection
increasingly tricky.
AI has invaluable potential to streamline
document processing, but it also can be
used to falsify paperwork and perpetrate
fraud. The best way to combat AIgenerated
fraud is with better AI tools
embedded in document processing to
identify the fakes.
THE COST OF DOCUMENT FRAUD
The losses from fraud and forged
documents continue to mount as criminals
become more sophisticated. According to
the US Department of Justice, settlements
for false claims adjudicated under the
False Claims Act exceeded $2.2 billion in
2022. The Federal Trade Commission (FTC)
also reports that consumers lost nearly
$8.8 billion to fraud in 2022, a 30%
increase over the previous year. Most of
that money was lost to investment scams
($3.8 billion), and $2.6 billion was lost to
imposter fraud.
Insurance fraud costs American
consumers $308.6 billion each year.
More than 20% of property-casualty
losses are because of fraud, and $60
billion yearly is lost to Medicare fraud.
Home loans are another common target
for fraud. In the second quarter of 2022,
an estimated 0.76% of mortgage
applications contained fraudulent
paperwork. That represents one in 131
mortgage applications.
There has also been a rise in income
fraud, such as doctored pay stubs and W-
2 forms. These types of documents are
often used to create false identities. The
IRS reported $5.7 billion in tax fraud in
2022, making tax fraud the third mostreported
form of fraud reported in 2022.
Any transaction that relies on
documentation can be a target for fraud.
The right AI and IDP technology could
prevent most of these losses.
THE RISE IN IDENTITY THEFT
Identity theft is a growing problem that is
contributing to document fraud. The FTC
reports that there were nearly 560,000
identity theft cases in the United States in
the first half of 2023 and estimated that
reported identity theft cases would exceed
1 million by the end of 2023, which is
higher than any pre-pandemic year.
Identity theft cases spiked in 2020 and
2021, reaching unprecedented levels of
1.4 million complaints per year.
Identity theft is most commonly used for
fraudulent online purchases, loan
applications, and applications for
government benefits. When the U.S.
government issued relief cheques during
the pandemic, many criminals used
identity theft to steal the funds.
Credit card fraud remains the biggest
problem stemming from identity theft. By
the third quarter of 2023, Americans had
filed more than 220,000 credit card fraud
complaints, representing 4 out of every 10
identity theft complaints.
Adopting AI-powered document
validation as part of IDP can head off most
of these fraudulent transactions,
identifying forged applications and
documents before they are processed.
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@DMMagAndAwards
January/February 2024
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