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The Scamdemic: How digital identity could help combat the rise in social media scams
Home > Technology > The Scamdemic: How digital identity could help combat the rise in social media scams
Global Banking & Finance Review®
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By Ankur Banerjee, CTO and co-founder of cheqd – a market-leading solution enabling individuals and organisations to take control of their data.
From the eponymous Tindler Swindler – a Netflix true crime documentary covering the stories of victims of a dating app-based swindler – to the notorious Anna Delvey – who posed as a wealthy German heiress while living in New York – the media has exploded recently with stories of cunning individuals who have weaponised false identities to attain large sums of money, power and influence. Arguably, these seemingly outlandish stories fascinate us less because they seem too exceptional to be true, but more because they run strikingly parallel to our own reality, re-enacting on a much larger scale a threat that has increasingly been playing out in our lives.
According to UK Finance, the prevalence of scams beginning on social media increased significantly in 2021, with social media becoming the most profitable way for scammers to operate. The US has witnessed a similar social media scamdemic too. Data collected by the Federal Trade Commission shows that more than 25% of people who reported losing money to fraud in 2021, said it started on social media with an ad, a post or a message.
All of this comes at a time when the internet has become opaque and more difficult to navigate than ever. Users are continually forced to assess whether a piece of news is fake or real, whether an image has been Photoshopped or filtered – or even a “deepfake”. In an era where social media has normalised unreality, it has become increasingly challenging to validate who or what we are interacting with online. What these stories bring into focus, then, is the extent to which there’s a lack of fundamental infrastructure needed to ensure transparency and trust. Self-sovereign Identity (SSI) technology could prove key to solving this issue, serving as a key building block that could help re-instil a level of certainty and security to our interactions online. SSI is a method of identity that centres the control of information around the user. It safeguards privacy by removing the need to store personal information entirely on a central database and gives individuals greater control over what information they share.
At cheqd we experienced first-hand the need for such infrastructure when attempting to partner with YouTubers last year. In order to verify that the people who approached us were in fact the Youtube stars they claimed to be, the Youtuber updated their page biography with the words ‘XXX’ to prove the ownership of the page. While a seemingly logical way to verify their identity, this method nonetheless possessed a set of problems of its own. What if this person had simply hacked the real Youtuber’s page? What if they were not who they claimed to be? Moving forward with this interaction would require us to invest a large amount of trust—potentially misplaced trust that could have disastrous consequences.
This experience is testament of the value of Self-sovereign Identity technology, which could help dispel some of the uncertainty clouding our interactions online. Instead of data being administered and owned by third-party institutions, individuals would instead be able to create a single digital profile that they can share with other parties as and when they choose. This has two benefits. Firstly, the widespread adoption of digital identities could help prevent instances of ‘catfishing’ or scamming by granting social media platforms a quick and efficient method of verifying that you are who you say you are.
Secondly, this process of verification can be done in a decentralised manner without other people or platforms needed to see or retain control of your data. Other parties can simply see that you are ‘verified’, preventing the creation of centralised data siloes that could potentially prove ripe ground for hackers. Instead of online encounters being underwritten by a precarious sense of trust, SSI would instead enable interactions that are trustless by design, meaning that individuals or platforms would no longer need to know or view all the personal details of who they are dealing with—passport, license, bank statement— to know they are safe to engage with.
Dating apps such as Tinder and banking services like Revolut have attempted to address security concerns by implementing a selfie facility to prove your identity. But this process nonetheless remains time-consuming and inefficient for the individual, who must upload their details over and over again for each new organisation or platform. This process can also be costly for the organisations paying for verification services. Instead of having to submit multiple applications, SSI would allow you to house all of your credentials in a single digital identity wallet that you can share securely with third parties as and when you choose. This would in turn make the verification process simpler and more efficient, removing the need to fill out multiple different applications for each separate platform.
The evolution of the internet is fast outpacing security, transparency, and privacy. As Web 2.0 develops into Web 3.0 and individuals begin to spend more of their lives online, it will be of paramount importance to introduce infrastructure that can ensure the same degree of clarity and safety that we enjoy in our everyday encounters, while still remaining streamlined and efficient. By enabling the creation of trustless transactions, SSI could remedy some of the internet’s vulnerabilities as well as help prevent those who wish to exploit them, resulting in the creation of a more secure online experience for all.
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