Customer Service
Prevention and the cure: How AI is helping combat ID fraud for retailers
AI has made fraud more complex and more difficult to detect, but it also offers the clearest path to resilience. As fake IDs and synthetic identities become more advanced, the tools used to detect them must evolve just as quickly.
June 6, 2025 by Jimmy Roussel — CEO, IDScan.net
Retailers are increasingly turning to artificial intelligence to both protect their businesses and create safer, more seamless customer experiences. Among the most pressing threats is the rapid rise of fake and synthetic IDs — including everything from self-checkout scams to buy-online-pick-up-in-store fraud and larger-scale organizational retail crime.
A rising tide of fake and synthetic identities
Combating fake IDs has become an everyday reality for many retailers. Data from IDScan's 2024 Fake ID Report showed that more than one million fake IDs were flagged by the platform in the last year, a stark reminder of how frequently bad actors attempt to pass through traditional identity checks. Whether used for underage purchases, return fraud, or as part of coordinated theft rings, fake and synthetic identities are undermining retail security at scale.
The problem no longer just lies in fraudulent identities. Thanks to tools like generative AI and deepfake technology, counterfeit credentials can now mimic real IDs with alarming precision. Combined with the growing availability of these tools online, the barrier to entry for fraudsters has never been lower, proliferating fraud attempts for an increasing array of industries, such as cargo and automotive.
The IDScan report on fraud data shows 40% of fraudulent documents can be intercepted by detecting formatting errors, barcode issues, or template mismatches — indicators often invisible to the human eye. A further 36% of fake IDs are identified using advanced scanning methods, including UV and infrared light, hologram verification, and consistency checks between front and back data.
Retail environments and vulnerability
Retailers face unique challenges when it comes to identity verification. The need for verification speed, customer satisfaction, and seamless checkout often comes at the expense of rigorous ID checks.
At self-checkouts, where staff are stretched thin and oversight is limited, these pressures are often magnified. Age-restricted goods, like alcohol and tobacco, are particularly at risk as underage buyers frequently exploit gaps in supervision, which can result in significant fines, reputational damage, customer harm, and license suspension.
The situation is similar to BOPIS fraud. Criminals often use stolen or synthetic identities to make online purchases and then collect them in-store using a fake ID. The growing sophistication of these fraud strategies means many legacy verification systems cannot keep up with modern demands, leaving businesses vulnerable.
Why AI has become essential to modern fraud prevention
AI has become an essential tool for fighting fraud. This is not only because of automotive capabilities increasing verification speed, but also its ability to detect minute discrepancies that the human eye can often overlook. These advanced ID scanning systems use image technology to validate details like holograms, fonts, embedded security features, and match biometrics — all ensuring the person presenting the ID matches the information on the document.
Advanced technological solutions utilize cutting-edge technology capable of identifying up to 95% of fake IDs, such as AI-powered document verification and biometric analysis, to provide a more reliable verification process.
Some systems may go further and incorporate detection to prevent spoofing attempts via masks or printed images. These features aren't about replacing humans, but augmenting them, and offering an added layer of certainty in a fast-moving or understaffed retail setting.
AI doesn't end at the checkout counter. It also plays a crucial part in the back-end operations. Connecting scanned data with third-party databases helps authenticate documents or IDs in real time. This, in turn, helps reduce false positives and makes confident decisions for employees.
Age verification and the importance of compliance
AI tools have played a big part in changing compliance, helping underage buyers alter the age on their digital ID images. This is an especially important consideration for sectors that deal with alcohol, tobacco, cannabis, and adult content.
Rather than relying on staff to manually inspect an ID, AI is able to instantly and accurately confirm age eligibility. This helps retailers not only stay compliant with local laws but also mitigate the risk of fines, reputational damage, and litigation.
Better for customer experience and security
This isn't just about stopping fraudsters from using false IDs — it's also about improving the experience for genuine customer satisfaction. Nobody wants to be wrongly flagged for suspicious activities or documents, holding up a line for unclear procedures is frustrating. When done right, identity verification powered by AI can be nearly invisible to the consumer. It's quick, secure, and non-intrusive.
The IDScan report on fraud data shows 40% of fraudulent documents can be intercepted by detecting formatting errors, barcode issues, or template mismatches — indicators often invisible to the human eye. A further 36% of fake IDs are identified using advanced scanning methods, including UV and infrared light, hologram verification, and consistency checks between front and back data.
Moving forward
AI has undoubtedly made fraud more complex and more difficult to detect, but it also offers the clearest path to resilience. As fake IDs and synthetic identities become more advanced, the tools used to detect them must evolve just as quickly.
Companies that use this type of technology will be more equipped for fraud prevention. For retailers, staying ahead of fraud isn't just about protecting revenue, but safeguarding brand integrity and consumer confidence in an increasingly digital, decentralized world.
About Jimmy Roussel
"I specialize in starting up small technology firms and scaling them through $10MM in sales and beyond. I have experience on both the business/finance and technology sides, and can easily translate between the different stakeholders. Specialties: Fund raising, setting up a business from scratch, corporate governance"
