Listen to this Post
AI and Bots Are Redefining Trust in Digital Identity
Okta, a leading identity and access management provider, has issued a stark warning about the dramatic rise in fraudulent online signups. According to its Customer Identity Trends Report 2025, bots were responsible for a staggering 46% of all customer registration attempts in 2024. This alarming surge reverses a previous downward trend and underscores how AI-powered attacks are rapidly reshaping the digital trust landscape. Based on operational telemetry from Okta’s Auth0 platform and a global survey of 6,750 consumers, the report reveals troubling trends that affect industries across the board — particularly retail, finance, and energy.
Bot-Driven Fraud Reaches Unprecedented Levels
Okta’s findings show a volatile threat landscape, with bot-related fraud peaking at an astounding 93% on April 6, only dipping as low as 14% once — on February 29. Outside of that anomaly, no day in 2024 saw less than 30% of signups classified as fraudulent. This widespread abuse is closely tied to automated AI workflows, which now allow cybercriminals to mimic human behavior with astonishing accuracy.
Retail and e-commerce were prime targets, suffering from 69% of all fraudulent signup attempts. Financial services followed closely at 64%, with energy/utilities at 56% and manufacturing at 54%. The lure of signup rewards and member-exclusive perks may be incentivizing attackers to mass-create fake accounts. But the consequences stretch beyond just rewards abuse. Fraudulent signups can lead to DoS (Denial of Service) attacks, resource consumption, and the later exploitation of aged accounts to bypass security systems.
Meanwhile, user behavior is also contributing to the growing complexity of digital authentication. Despite 72% of users evaluating a company’s security before registering and 64% expressing concern about identity fraud, nearly one in four users “always” or “often” abandon signups due to poor login experiences. The most common frustration? Long forms — with 62% of users citing them as the main barrier.
To defend against these threats, Okta recommends a multi-layered defense strategy, including:
Rate-limiting signup attempts
DDoS mitigation
Bot filtering via behavior analysis and threat intelligence
Advanced CAPTCHA for risk-based authentication
WAF rules and IP-based access control
Most notably, Okta suggests organizations start promoting passkey-based signups to improve both security and user experience.
What Undercode Say:
The Age of AI-Enhanced Fraud Is Here
Okta’s 2025 report confirms a reality cybersecurity experts have warned about for years — AI isn’t just revolutionizing productivity; it’s transforming cybercrime. With nearly half of all customer signups originating from bots in 2024, we’ve entered an era where digital identities are constantly under siege. The data reveals how cybercriminals are no longer relying on outdated scripts or simplistic brute-force tools. Instead, they’re leveraging sophisticated AI models that emulate human behavior with uncanny precision, bypassing basic security barriers undetected.
Sector-Wide Vulnerability: Retail Is Bleeding
Retail and e-commerce platforms, which often rely on new user engagement and promotional incentives, have become the soft underbelly of the digital economy. When nearly 7 out of 10 signup fraud attempts target these businesses, the implications go far beyond lost discounts. Fraudulent account creation can be used to harvest personal data, probe platform vulnerabilities, and launch credential-stuffing attacks later. It’s no longer just a nuisance; it’s an operational threat that can bring platforms down or erode customer trust.
The Hidden Cost of Poor UX
Ironically, one of the biggest challenges in combating this surge in fraud is balancing security with usability. As highlighted by Okta, users are increasingly abandoning legitimate purchases due to frustrating login and signup processes. This creates a difficult trade-off: the more secure you make onboarding, the more users you risk losing. Companies that overcomplicate authentication may find themselves secure — but broke. It’s a paradox: secure enough to keep the bots out, but easy enough for humans to stay in.
A Call for Smarter Authentication Tactics
The solution isn’t to make forms longer or introduce CAPTCHA after CAPTCHA. Instead, dynamic, AI-driven security tools must meet attackers on their level. Rate limiting, WAFs, and threat intelligence integrations are all part of a much-needed zero-trust infrastructure where identity verification is contextual, not static. The recommendation to adopt passkey technology is particularly prescient. Passkeys, which replace traditional passwords with device-based authentication, reduce phishing and bot vulnerabilities while improving user experience.
The Future Is Frictionless but Fortified
The future of authentication will not tolerate friction or fraud. Okta’s report makes it clear: companies that fail to modernize their identity frameworks risk being left behind — or breached. Identity is no longer a gatekeeper; it’s the foundation of digital trust. And in the age of synthetic identities and AI-generated user behavior, only adaptive, intelligent identity systems will survive.
🔍 Fact Checker Results:
✅ 46% of signups in 2024 were fraudulent — confirmed by Okta’s 2025 report
✅ Retail & finance were most affected by signup fraud — statistically supported
✅ Passkeys reduce friction and improve security — backed by emerging industry trends
📊 Prediction:
Expect bot-driven signup fraud to rise above 50% in 2025, especially with generative AI tools becoming more accessible. Retail, fintech, and SaaS platforms will need to prioritize behavioral biometrics and passkey adoption, or face increased exposure to fake accounts, abuse of resources, and reputational damage. Companies that fail to evolve their authentication systems will be the easiest prey in the next wave of AI-powered cybercrime.
References:
Reported By: www.infosecurity-magazine.com
Extra Source Hub:
https://www.medium.com
Wikipedia
OpenAi & Undercode AI
Image Source:
Unsplash
Undercode AI DI v2
