This Act establishes a voluntary grant program for states to develop secure, privacy-preserving digital identity systems, such as digital driver's licenses, to combat rising identity fraud and theft.
Pete Sessions
Representative
TX-17
The Stop Identity Fraud and Identity Theft Act of 2026 addresses the rising threat of identity fraud by establishing a grant program for states. This funding will help states develop secure, digital versions of identity credentials, like driver's licenses, to combat fraud and deepfake attacks. Participation in this program is entirely voluntary for states. The goal is to enhance digital identity security and reliability for trusted online transactions.
New Federal Grant Program Aims to Put Secure Digital Driver's Licenses on Your Phone by 2026.
The Stop Identity Fraud and Identity Theft Act of 2026 is a push to modernize how we prove who we are online. With identity theft hitting over 353 million people recently and the government losing hundreds of billions to fraud, this bill tasks the Treasury Department with handing out grants to states to build high-tech, digital versions of driver's licenses and birth certificates. These aren't just photos of your ID; they are designed to be secure, interoperable credentials that meet National Institute of Standards and Technology (NIST) guidelines to help you navigate everything from opening a bank account to filing taxes without getting your data swiped by hackers or AI-generated deepfakes.
Your Wallet, Upgraded
Under Section 3, states that opt-in can use federal cash to build digital IDs that are tougher to fake than the plastic in your pocket. For a freelance coder or a retail manager, this could mean fewer 'verify your identity' headaches and better protection against someone opening a credit card in your name using a deepfake. The bill specifically targets legacy systems—those clunky, old databases that are basically a playground for identity thieves—and replaces them with tech that can handle modern cyber-threats. Plus, it requires states to spend at least 10% of their grant money on 'assistance services,' meaning if you aren't tech-savvy or don't have the right documents, there’s a dedicated budget to help you get through the digital door.
Keeping the Physical Option
If you’re worried about being forced into a digital-only world, the bill includes some guardrails. Section 3(c) explicitly forbids states from requiring you to use a digital ID or from getting rid of physical cards altogether. It’s designed to be an 'and,' not an 'or.' However, there is a catch for some: the bill strictly prohibits using this federal money to issue digital credentials to unauthorized immigrants. This creates a two-tiered system where some residents might have access to the most secure, streamlined verification tech while others are left using older, more vulnerable methods, potentially making it harder for them to access services that eventually lean on these new digital standards.
The Deepfake Defense and Implementation Gaps
One of the most interesting parts of this bill is its focus on AI. It specifically directs states to guard against 'artificial intelligence-powered deepfake attacks,' which are becoming a massive problem for banks and government agencies. While the goal is clear, the bill is a bit vague on the 'how.' Since every state can choose whether to participate and how to build their system, we might end up with a patchwork where a digital ID works perfectly in one state but is a glitchy mess in another. For small business owners or HR managers who need to verify identities across state lines, this 'voluntary' approach could mean the digital transition takes years to actually feel seamless across the country.