Identity fraud involves an illegitimate use of identity documents and personal information for fraudulent and dishonest objectives. Identity fraud cases can be generally divided into two categories: identity theft (information relevant to a real person) and synthetic identity creation (invented identification information). Identity fraud stands often as a classic prerequisite for a variety of crimes and illegal actions, such as:

  • Human trafficking, prostitution, and illegal immigration: in these cases, fake ID documents allow foreign people or illegal immigrants to pass the immigration controls and, lately, to have access to economic resources (such as access to employment and social security benefits by providing false documents).

  • Economic and financial crimes: such as opening a bank account and obtaining payment cards using a fake identity, fraud to social security, telecom operators and car rentals.

  • Terrorism and transnational organized crimes: according to a report on organized crime made by Canadian criminal intelligence service in 2010, organized crime groups are known to produce, supply or use false identities in order to avoid detection by law enforcement, particularly when traveling and to protect their assets from confiscation.

According to the French National Institute for Advanced Studies in Security and Justice (INHESJ), there had been about 12 000 identity fraud cases detected by the national police in France in 2012. Moreover, for the same year, the Border Police (Police aux Frontières) had arrested 9 245 holders of false documents. The number of forged documents seized by the Border Police in France has almost doubled in 2012.

The return of investment (ROI) in an automatic identity fraud detection system is considerable. In France, identity fraud costs €2 billion to National Healthcare, between €4 to €8 billion to Unemployment Insurance Agency (Assedic). Identity fraud represents 50% of social welfare (RMI) fraud much of which is directly sent out of the country, several hundred million loss to Family Allocations Office (CAF), €180 million loss to the national train company and €30 million to Air France.

The Directorate­General of the European Commission conducted a study on problems and measures in the field of identity theft at the EU level. The final report confirms that identity fraud and identity­ related crimes affect a considerable proportion of the population and the problem is increasing. About 8 million individuals are affected by identity theft with an average loss of around €20 billion at the EU level. The study shows that European businesses and public organizations losses because of identity theft and fraud could be as high as €500 billion. According to the same European report, UK telecommunication sector had to pay for goods and services used abusively with a false identity in the amount of €592 million during the time between 1 April 2006 and 31 March 2007. A survey conducted in the USA reported that over 9 million Americans were identity fraud victims in 2004, corresponding to a total annual cost of $51.4 billion and a median cost of $750 per victim. While the annual cost of synthetic identity creation in Canada is about $1 billion and is still growing exponentially.