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Cloud computing is a new generation of the technology that has been designed to cater for commercial necessities and to run suitable applications or solve IT management issues. While cost and ease of use are two top benefits of cloud, trust and security are the two top concerns of cloud computing users. Federated identity as a useful feature for user management and Single Sign-on (SSO) has also become an important part of federated identity environment. Misuse of the identity, identity theft, and platform trustworthiness are some of the problems in the federated identity environment. OAuth, OpenID, SAML are three main concept in cloud authentication and federated environment. This paper overviews the security issues of federated identity in the cloud authentication and highlights the proposed models to solve identity theft in the federated environment.