Are businesses overly optimistic about their capabilities to combat identity fraud? Recent findings indicate they might be.

Per the The Battle in the Dark 2025 survey conducted by Signicat and Red Goat Cyber Security, only 5% of respondents indicated a lack of confidence in their identity fraud processes. Meanwhile, approximately three-quarters of businesses believe they are successfully addressing the issue, despite the fact that 47% do not track identity fraud consistently.

“The challenge with identity fraud is you can’t identify what you aren’t monitoring,” remarked Jennifer Pitt, a Senior Analyst at Fraud Management from Javelin Strategy & Research. “If consumers are not reporting instances of fraud due to various reasons, it creates the impression that existing fraud prevention measures are effective.”

A Growing Issue

The confidence numbers mentioned above appear even more alarming in light of European businesses’ estimation that one in five transactions is fraudulent. Identity fraud and its related costs impact up to 22% of their annual revenue.

Furthermore, the situation continues to worsen. Signicat’s data reveals a 69% increase in identity fraud attempts over the past four years, with overall fraud attempts up by 88%.

Challenges in Detection

Identity fraud represents 9.3% of all attempted frauds this year, making it the most common type of fraud across Europe. Account takeover and social engineering follow as the second and third most prevalent methods. The study shows that identity fraud is the most frequent in the banking sector, whereas in payments, account takeover strategies are more commonly used.

“Certain types of fraud, such as account takeover and synthetic identity fraud, are particularly hard to spot,” noted Pitt. “Some organizations might depend on a single detection method rather than adopting a layered approach necessary to handle the increasingly sophisticated forms of fraud.”

The research also found that 80% of businesses believe pushing back against criminals merely leads them to change their tactics, making it a significant ongoing challenge in the fight against fraud.

“Fraud is advancing faster than current detection systems can keep up,” Pitt explained. “Organizations relying on outdated and static detection methods may miss newer, more advanced threats, leading to an illusion of effectiveness when in reality, fraud remains undetected.”