Top 4 fraud threats FIs should watch for

Fraud poses new threats each year as AI grows in sophistication, requiring FIs to increase monitoring and enhance fraud detection and prevention methods. The number of identity fraud victims rose 21% in 2025 to 11.4 million, financial consultancy Javelin Strategy & Research reported in a whitepaper released in June with financial data aggregator Plaid . Identity fraud resulted in $27.3 billion in losses in 2025, a 1% increase year over year, according to the whitepaper. Although a 1% increase seems like good news — especially compared with the 19% jump in 2024 from 2023 — it is only an “illusion of progress,” Jennifer Pitt , senior analyst of fraud and security at Javelin, said in an Aug. 20 webinar. “ Fraudsters using AI and automation are now able to scale their attacks and target many more people, so they don't need that extremely high dollar value,” said Pitt, who authored the whitepaper. With more victims, fraudsters can be more cautious, relying on smaller payouts from many victims as opposed to larger payouts from a handful. This makes it more difficult for FIs and victims to detect and stop identity fraud. To combat this, FIs must approach fraud detection and prevention with multilevel checks and ongoing analysis, Pedro Sanzovo , head of fraud at Plaid, said in the webinar. “You can never rely on one data point,” Sanzovo said. “You need to have a layered approach.” Pitt and Sanzovo said the four greatest fraud threats are: 1. New-account fraud Thieves increasingly are using AI and synthetic identities to create new accounts with stolen information, Pitt said. The number of victims and dollar loss to new-account fraud grew in 2025 from 2024. [caption id="attachment_57387864" align="alignnone" width="690"] (Courtesy/Javelin Strategy & Research)[/caption] “New accounts have no history,” Pitt said. “We're relying on signals that we get during the application process, or [on] consortium data, the network intelligence data, relying on other organizations to provide that.” 2. Account takeover “Account takeover is still the costliest type of fraud for consumers,” Pitt said. [caption id="attachment_57387862" align="alignnone" width="681"] (Courtesy/Javelin Strategy & Research)[/caption] Because existing accounts already have been vetted and approved, FIs must implement ongoing know-your-customer checks to catch account takeovers, Pitt said, by: Watching for aberrant behavior such as sudden changes to contact or identity information and unusual logins or bank linking. Using device intelligence to flag anomalies such as new devices being used miles away from recognized devices just a short time apart. Configuring step-up triggers, like selfie reverification, for large transfers, adding new payees and credential changes. 3. Scams Javelin reported a $10.7 billion loss in 2025 tied to scams, the type of fraud in which bad actors convince victims to give them their money or personal information. “Scams are one of the hardest sorts of abuse and fraud types for a business to catch, mainly because ultimately there is a legitimate user on the other side,” Sanzovo said. “Doing identity checks won't really solve your problem.” Javelin found that 56% of scam victims who were deceived into providing personal information to scammers did not lose money — at least right away. “Information is a hot commodity right now,” Pitt said. Pitt said, as a former law enforcement fraud investigator, suspects often told her that they stored victim information for years with plans to use it down the road. Consumer education is vital in the fight against scams, Pitt said 4. First-party fraud First-party fraud — such as application, bust-out and chargeback fraud — accounted for 36% of fraud in 2024, according to Javelin. “They have the money, they have the account, but they never intended to pay,” Sanzovo said. Identity verification does not root out first-party fraud because bad actors are using their own identities, Pitt said, adding that many FIs take an all-or-nothing approach to first-party fraud — either agreeing to credit everyone who says they were defrauded or refusing all reimbursements, she said. “That all-or-nothing approach will cause you to have a lot of losses,” Pitt said. Register here for the FinAi Lending Summit, set for Oct. 7-8 in Las Vegas. This inaugural event will include speakers from Fifth Third and Capital One , as well as a fireside chat with Piermont Bank founder and Chief Executive Wendy Cai-Lee .

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Top 4 fraud threats FIs should watch for

Multilayered approaches can help banks catch bad actors

B2B payments ripe for agentic AI

Arise Financial: New core, new name and an AI future

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