Identity fraud is becoming an increasingly costly issue for businesses worldwide, with businesses losing millions each year to sophisticated scams. According to a new global study by security firms Entrust and Docusign, the average direct cost of identity fraud for large enterprises now stands at $13 million (£10.3 million) annually, rising significantly for even bigger companies.

The Future of Global Identity Verification report found that over two-thirds (69%) of organisations have seen a rise in fraud attempts. For businesses with over 10,000 employees, 20% reported direct and indirect fraud costs exceeding $50 million (£39.6 million) per year.

The growing threat of AI-driven fraud

One key driver of increasing fraud rates is artificial intelligence (AI), which is enabling cybercriminals to develop more advanced and frequent attacks. The research found that 51% of organisations experience higher fraud rates when relying solely on usernames and passwords, making single-factor authentication one of the least secure methods. By contrast, only 21% reported fraud attempts against facial biometric liveness detection, demonstrating the effectiveness of advanced authentication solutions.

Balancing security and customer experience

As fraud techniques become more sophisticated, organisations are investing in stronger identity protection measures. However, many fear these security upgrades could negatively impact customer experience. The study found that 58% of businesses are concerned that stricter fraud controls might frustrate users.

Despite these concerns, companies increasingly recognise the financial and reputational benefits of investing in identity verification (IDV) solutions:

• 70% agree that technology investment is the best way to reduce identity fraud costs.
• 74% plan to increase their spending on IDV solutions in the near future.

Businesses that have already invested in IDV tools reported an average cost saving of $8 million (£6.3 million). High investors in IDV are:

• 2.2 times more likely to see significant cost savings.
• 1.7 times more likely to report a major reduction in fraud.
• 2.7 times more likely to view security as a competitive advantage.
• 1.6 times more likely to report a positive impact on brand reputation.

Smarter security without the friction

Tony Ball, President of Payments & Identity at Entrust, noted that stronger security does not have to come at the expense of user experience. “Modern IDV solutions and adaptive authentication enable both. End-users can verify their identity with a quick biometric selfie, while fraud detection tools such as device recognition and AI-powered deepfake detection operate in the background,” he explained.

Mangesh Bhandarkar, Group Vice President of Product at Docusign, echoed this sentiment: “As identity fraud escalates, enterprises are under pressure to balance security with seamless user experiences. This study reinforces that stronger security doesn’t have to hinder the customer experience—on the contrary, it enhances trust and engagement.”

Investing in fraud prevention

With digital fraud becoming more sophisticated, businesses of all sizes need to take proactive steps to protect themselves. Many organisations are committing to increasing their investment in security tools that provide strong fraud prevention without adding unnecessary complexity for users.

The research highlights the growing urgency for UK businesses to adopt advanced IDV solutions to safeguard their operations, protect their customers, and maintain a competitive edge in an increasingly digital marketplace.