Digital identity: risks and current solutions to protect people and organisations

Digital identity: risks and current solutions

Almost everything we do today leaves a digital trail: logging into apps, shopping online, signing contracts, accessing public services, using social networks and even authenticating on corporate devices. The sum of these data points and credentials forms what we call a digital identity.

While it makes life easier for people and organisations, it has also become an extremely valuable target for criminals. Document fraud, account takeover, social engineering and large-scale data breaches show, in practice, that protecting digital identities is a strategic priority — not just a technical detail.

In this article, we will look at:

• What digital identity is in practice;
• The main risks today;
• Current solutions to reduce these risks;
• A checklist for organisations that want to take the next step.

1. What is digital identity, exactly?

Digital identity is the set of information, credentials and attributes that allow systems and services to recognise a person (or company) in the online world. It may include:

• Registration data: name, ID/CPF, e-mail address, phone number, postal address;
• Access credentials: logins, passwords, tokens, certificates, passkeys;
• Official documents in digital format (such as digital ID cards and national identity documents);
• Behavioural attributes: browsing patterns, typical location, device, time of access;
• Consent records and privacy settings.

This identity may be managed by different actors:

• Governments, with official digital identities (such as the new Brazilian National Identity Card in physical and digital formats, integrated with the Gov.br ecosystem);
• Private companies, which maintain customer accounts, access credentials and usage history;
• Identity platforms (Identity Providers – IdPs), which provide authentication and federation of logins across multiple systems.

The more services are connected to the same digital identity, the greater the convenience for the user — and the greater the impact in the event of fraud or compromise.

2. Main risks linked to digital identity

2.1 Credential theft and account takeover

The most visible risk is credential theft: someone obtains a login and password (or weak authentication tokens) and starts impersonating the victim. Common techniques include:

• Phishing and its variants (smishing, vishing): fake pages or convincing messages to steal passwords and SMS codes;
• Large-scale data breaches on other platforms, exploiting password reuse;
• Malware that captures keystrokes, session cookies or authentication tokens.

Once the account is under control, the attacker can:

• Change contact data and lock the legitimate user out;
• Perform unauthorised financial transactions;
• Sign up for services, accept terms or consents on behalf of the victim;
• Access other linked accounts (single sign-on, social login, API integrations).

2.2 Identity and document fraud

The digitalisation of identity documents has brought convenience, but also new fraud vectors. Criminals use leaked data, images, screenshots and even advanced forgery techniques to:

• Open bank accounts or credit lines in someone else’s name;
• Register SIM cards to carry out scams;
• Sign contracts, loans or instalment purchases using stolen data.

The combination of digital documents, selfies, deepfakes and personal data obtained from breaches creates a challenging scenario: it is becoming increasingly difficult to distinguish between a legitimate user and a fake or synthetic identity.

2.3 Privacy and excessive profiling

Digital identity is not just about “logging into systems”. In many cases, it concentrates a detailed history of everything the user does: pages visited, preferences, geolocation, purchasing behaviour, app interactions and more.

Without proper governance, this leads to risks such as:

• Excessive profiling of consumers without transparency;
• Misuse of data for purposes that were not clearly communicated;
• Breaches involving highly sensitive information, which can be exploited in social engineering scams.

For organisations that process personal data, this is a direct point of concern under LGPD and GDPR, which require transparency, data minimisation and adequate security.

2.4 Social engineering attacks and SIM swap

Many “account recovery” mechanisms still rely on SMS, phone calls or weak security questions. This opens the door to attacks such as:

• SIM swap: the criminal convinces the mobile operator to transfer the victim’s number to another SIM card, intercepting authentication and password reset codes;
• Direct social engineering: contacting the user or call centre and gaining access using public or leaked information.

In these cases, the problem is not only technology, but also weak processes, lack of staff training and insufficient additional checks.

2.5 Over-reliance on a single identity provider

Social login or identity federation models (for example, “Sign in with X”) bring convenience and often additional security. But they also create risks:

• Single point of failure: if the main account is compromised, multiple associated services are at risk;
• Strategic dependency: changes in the provider’s policies can directly affect user experience and security;
• Loss of control over how personal data is shared and used.

3. Current solutions to protect digital identities

The good news is that, while risks have grown, available solutions have also evolved. Below is an overview of the main areas.

3.1 Strong authentication and risk-based MFA

The first step is to move away from the “username + password only” model and adopt strong authentication, combining at least two of the three categories:

• Something you know (password, PIN);
• Something you have (token, device, hardware key);
• Something you are (biometrics, fingerprint, face, voice).

This includes:

• Authenticator apps (TOTP);
• Hardware tokens (security keys, smartcards);
• Push notifications in corporate apps;
• On-device biometrics (fingerprint, facial recognition).

More modern models adopt adaptive MFA, adjusting the level of verification to the risk of the session (new device, country, transaction value, unusual time, etc.).

3.2 Passkeys and phishing-resistant authentication

One of the strongest trends today is the adoption of passkeys and authentication standards based on FIDO2/WebAuthn. Instead of reusable passwords, the user has cryptographic credentials bound to their device and to the legitimate domain of the service.

In practice, this brings important advantages:

• Drastically reducing the risk of phishing, since keys do not work on fake sites;
• Eliminating weak or reused passwords across different services;
• Providing a simpler experience for users, who can authenticate with biometrics or a PIN on their own device;
• Less reliance on SMS and e-mail as second factors.

For companies, gradually moving towards passkeys and phishing-resistant credentials means raising the security level of user identities without adding friction.

3.3 Official digital identities and document wallets

Several countries are evolving towards official digital identity models, often associating a single document with a nationally recognised identity.

In Brazil, for example, the National Identity Card (CIN) uses the CPF number as a unique identifier and can be issued in physical or digital form. The CIN is integrated with Gov.br and uses features such as QR codes and online validation to reduce identity fraud and facilitate access to public services.

In addition, digital document wallets bring together multiple credentials (such as ID cards, driving licences and other documents) in a single app. When well implemented, these wallets:

• Make document forgery more difficult;
• Facilitate authenticity checks by third parties;
• Can be integrated securely with private services (banks, operators, digital platforms).

The challenge is to ensure that this centralisation follows a privacy by default approach, with strong access controls and transparency about how information is used.

3.4 Stronger identity verification and liveness checks

For account opening and high-risk processes (such as credit, SIM activation or access to sensitive services), companies have been adopting:

• Digital onboarding with document validation (OCR, MRZ reading, checks against official databases);
• Biometrics with liveness detection to prevent the use of photos, videos or deepfakes;
• Real-time risk analysis, combining device data, location, fraud history and behaviour.

This approach goes beyond “uploading a document” and evaluates the full context of the digital identity, making sophisticated fraud harder.

3.5 Governance, LGPD/GDPR and privacy principles

There is no digital identity protection without proper personal data governance. For organisations processing information about customers, employees or citizens, some points are essential:

• Data minimisation: collecting only what is necessary for the stated purpose;
• Clear legal basis: understanding when you rely on consent, contract, legal obligation, legitimate interest, etc.;
• Consent records and the ability to withdraw consent;
• Technical and organisational security: encryption, access controls, monitoring, incident response;
• Transparency with data subjects about how their digital identity is used.

Laws such as LGPD and GDPR not only require adequate protection, but also push organisations to structure processes, document decisions and demonstrate due diligence in the event of incidents.

3.6 User education and security culture

Finally, no technical solution is enough if people are not prepared. Good initiatives include:

• Ongoing campaigns about phishing, social engineering and common scams;
• Guidance on using password managers, updating devices and being careful with data sharing;
• Specific training for support and customer service teams, so that weak processes do not enable attacks.

4. Practical checklist for companies

If your organisation wants to strengthen the protection of customers’ and employees’ digital identities, use this checklist as a starting point:

1. Map identities and authentication points
   • Which systems handle logins for internal and external users?
   • What personal data and credentials are processed in each one?
2. Review authentication mechanisms
   • Do you still have logins protected only by username + password?
   • Where can you adopt strong MFA and, gradually, passkeys or FIDO2?
3. Strengthen account recovery processes
   • Eliminate weak security questions;
   • Reduce the sole reliance on SMS and e-mail;
   • Add extra checks for high-risk actions.
4. Integrate identity verification into critical flows
   • Onboarding of new customers;
   • Credit approval, limit increases, changes to sensitive data;
   • Activation of new devices or authentication factors.
5. Align identity security with LGPD/GDPR
   • Review legal bases, privacy notices and records of processing activities;
   • Ensure minimisation and purpose limitation for identity data usage.
6. Monitor and respond to incidents
   • Detect suspicious login attempts, attack patterns and anomalies;
   • Have an incident response plan that includes communication with data subjects and authorities when necessary.
7. Invest in education and culture
   • Train internal teams on digital identity risks;
   • Communicate good practices in a simple way to customers and end users.

5. Conclusion: digital identity as a critical asset

Digital identity is now a kind of “master key” for online life. It unlocks access to financial services, public benefits, healthcare, education, work and almost every relevant digital interaction.

Treating digital identity as “just a login feature” is a dangerous mistake. It must be seen as a critical asset that requires:

• Appropriate technology (strong MFA, passkeys, identity verification, monitoring);
• Mature processes (governance, LGPD/GDPR, incident response);
• Prepared people (aware users and trained teams).

Organisations that invest early in a robust digital identity strategy not only reduce fraud and regulatory risk, but also build greater trust with their users — a real competitive advantage in a world where trust is increasingly rare.

Extra tip: if your company is structuring personal data governance and digital identity, consider platforms that centralise consent management, records of processing and compliance evidence, making it easier to balance security, privacy and user experience.