As fraud tactics become more advanced, businesses are turning to artificial intelligence to safeguard their operations and their customers. One of the most pressing concerns today is the use of fake and synthetic identities in self-checkout (SCO) fraud, buy online, pick up in store (BOPIS) scams, and organized retail crime (ORC). These counterfeit credentials are being used to exploit loopholes in checkout processes, especially where verification methods are minimal or in some cases nonexistent.
According to IDScan.net’s 2024 Fake ID Report, over one million fake IDs were flagged using their VeriScan platform last year, highlighting both the scale of the issue and the need for more advanced, real-time detection capabilities.
AI has gone far beyond being a buzzword to establish itself as the backbone of modern fraud prevention. As synthetic identities and deepfakes become more sophisticated, current checkout processes find themselves a step behind those that are taking advantage. Standard fraud prevention measures such as manual ID checks or basic software flags can miss the subtle and increasingly sophisticated discrepancies on identity documents. Especially in retail environments where speed and convenience are paramount, these tools are too easily bypassed. The technology exists however, to better automate identity analysis, detect anomalies that are often invisible to the human eye, and operate at the scale and speed today’s retailers require.
A new era of ID fraud
Criminals are evolving, and so are their methods. Deepfakes, synthetic IDs, and AI-powered fraud networks are being used to exploit both digital and in-store transactions. To add further fuel to the fire, organized retail crime rings are deploying fake identities at scale in a bid to execute return fraud, BOPIS scams, and high-value thefts, all while appearing at the face of it as legitimate shoppers. To illustrate the extent of the damage that such organized crime can cause, a finance worker in Hong Kong transferred $25 million after interacting with deepfaked versions of colleagues on a video call. This wasn’t an isolated incident, it was a coordinated attack using synthetic identities to bypass trust-based verification. For businesses and retailers alike, this demonstrates how traditional ID checks and fraud prevention methods are no longer sufficient in the face of such advanced deception.
How AI is reinventing identity verification
Much like fighting fire with fire, to counteract these emerging threats retailers are embracing AI-powered identity verification, using systems that go far beyond visual inspection at face value. The technology is able to scan IDs at pixel level, verifying holograms, fonts, and embedded data using ultraviolet and infrared light techniques that can easily uncover high quality fakes. Taking the pressure and focus away from staff members who may be unfamiliar with IDs from other states or countries, AI handles them all with consistency.
Biometric matching adds a second layer of defense. By comparing a live photo to the photo on an ID, AI systems can ensure that the person presenting the ID is the person who they are claiming to be. Further still, anti-spoofing features prevent bad actors from using static images or video recordings to bypass the stringent verification methods. Together, these technologies make synthetic ID fraud and impersonation significantly harder to pull off.
AI verification tools also cross-reference IDs with third-party databases in real time, delivering a confidence score that helps businesses decide whether to proceed with a transaction. This is especially valuable in the retail environment at self-checkouts where human oversight can be minimal. With AI, suspicious behavior or invalid IDs can trigger an alert before a fraudster walks out the door.
The challenge of age-restricted sales at self-checkouts
We’ve all used self-checkouts with the aim of scanning and paying for goods more quickly than it would be to queue up at the till and have a cashier manually scan them for you. However, self-checkouts do present another challenge when it comes to verifying age for restricted products like alcohol, tobacco, or lottery tickets. Traditionally, this requires manual ID checks, which slow down transactions and divert staff from other duties. There is typically one or two staff members managing a large bank of checkouts, where, in busy stores staff might take a more relaxed approach to verifying the age of a shopper purchasing restricted goods in favour of keeping pace with the shop floor. The delays that checking IDs can cause can frustrate customers and lead to revenue loss. Worse, underage sales, whether accidental or not, carry serious legal and financial consequences.
AI-powered age verification is changing the game. These systems can instantly confirm age by scanning a government-issued ID, regardless of origin. This not only speeds up the checkout process but also reduces the risk of human error. For retailers, it means lower compliance risk and less dependency on staff intervention, in doing so freeing employees to focus on other priorities while still maintaining legal accountability.
Enhancing the customer experience
AI verification also enhances customer trust and experience. Shoppers want fast, frictionless service without detriment to security. AI-enabled solutions allow for both. By removing bottlenecks like manual ID checks and reducing false declines due to outdated fraud filters, retailers can deliver a smoother transaction process. This is especially important for omnichannel operations, where seamless customer journeys across online and offline touchpoints are now expected.
From onboarding to checkout, AI tools help protect personal data while streamlining identity confirmation. Whether a customer is picking up a BOPIS order or buying age-restricted products at SCO, they benefit from faster service and greater assurance that their information is handled securely. It’s a win-win for both consumers and retailers.
Building a safer future with AI
Whilst there is plenty of scaremongering around AI and the impact that it might have on our lives, the problem in this case is also the cure. AI-driven fraud prevention is a strategic imperative for business and retailers, not just a tech upgrade. As synthetic IDs and deepfakes become common tools of fraud, businesses must equip themselves with equally advanced defenses. The role of AI in verifying identities, flagging suspicious behavior, and reducing risk at checkout is already proving invaluable.
From stopping BOPIS fraud to managing age-restricted sales at self-checkouts, AI empowers retailers to protect revenue, reduce staff burden, and improve compliance. Consumers benefit from safer, faster, and more seamless experiences, in doing so building trust in the process.
Ultimately, the future of fraud prevention lies in technology that evolves in step with the threats it counters. By investing in AI now, businesses not only guard against today’s risks but lay the groundwork for a safer, more resilient retail environment tomorrow.
