Top Fraud Trends and Predictions for 2025 – And How Will the Industry Respond?

As we enter 2025, fraud remains a persistent and evolving challenge for financial institutions, businesses, and consumers. The statistics are staggering: over $1 trillion in losses globally due to scams, and only 4% of victims manage to recover their funds. What’s more, 93% of financial institutions express concern over the rise of artificial intelligence and generative AI-powered fraud attacks. These statistics underscore the pressing need for the industry to adapt to the ever-changing fraud landscape.

In a recent webinar, Datavisor’s CEO and Co-Founder Yinglian Xie interviewed experts from PWC, Datos Insights, and Mission Omega about the key fraud trends shaping 2025 and how financial institutions are leveraging advancements in fraud detection and prevention technology to mitigate these evolving threats and stop fraud.

The Rise of AI-Driven Fraud Schemes

One thing’s for certain: Fraudsters are using GenAI and AI-based tools to enhance their deception techniques and scale their operations like never before. “AI tools can help them amplify their attacks and to achieve scale in a way they never could before,” said Trace Fooshée, Strategic Advisor, Datos Insights.

AI-powered scams include deepfake videos, voice cloning, and generative AI-assisted phishing campaigns, making it increasingly difficult for victims and businesses to detect fraud in real-time.

The rise of scam farms is also extremely concerning, particularly in regions like Southeast Asia. “Some scam compounds now span 25 acres and are run by organized criminal rings, often involving human trafficking,” Fooshée said. “Fraud is longer just about financial losses – it’s an entire industry that exploits people at multiple levels.”

The Growth of First-Party Fraud

As banks increase their focus on scams and external fraud, they must also recognize and address fraudulent behavior coming from their own customer base. “About 40% of engagements with financial institutions now involve first-party fraud, including false claims and deposit fraud,” said Ian Mitchell, Co-Founder of Mission Omega and Founder of The Knoble. Check fraud is also on the rise, despite the notable shift to digital payments.

“Check fraud has become more democratized, with fraudsters openly sharing techniques on social media and messaging platforms like Telegram and WhatsApp,” said Frank Badalamenti, Principal of Cyber, Risk and Regulations for the Financial Crimes Unit at PWC, adding that this accessibility makes it easier than ever for new fraudsters to enter the game. In fact, 80% of financial institutions say check fraud is a concern.

Is Fraud Prevention Playing Catch-up?

As they grapple with new types of cybercrime — from synthetic identity fraud and identity theft, to social engineering and deepfakes, to payment fraud and app fraud — financial institutions and credit unions may feel like they’re always one step behind of cyber criminals. Putting the right security measures in place to protect themselves and their customers against vulnerabilities requires a proactive approach to cybersecurity and fraud prevention.

How To Fight Back Against Fraud

So how do banks fight back? Collaboration, regulation, and the implementation of AI fraud detection and prevention technologies are key to reducing fraud risk. Let’s take a closer look at some best practices the experts recommend for combatting increasingly sophisticated fraud.

Strengthening Collaboration Across Industries

One of the most critical shifts happening in fraud prevention is the increased collaboration between financial institutions, tech companies, telecom providers, and regulators. “The fraud crisis cannot be solved by financial institutions alone,” said Fooshée. “It requires a broader collaboration that includes law enforcement, regulators, and tech platforms.”

By sharing information and best practices, these entities can collectively improve fraud detection and response.

Enhanced AI and Machine Learning for Fraud Detection

Just as fraudsters are using AI, financial institutions are harnessing AI-driven tools to detect and prevent fraudulent activities. Predictive analytics, anomaly detection, and network link analysis are being used to identify suspicious behaviors before they result in fraud losses.

“There’s a race between fraudsters and financial institutions to leverage AI effectively, and banks must continue innovating to stay ahead,” Badalamenti said.

Balancing Fraud Prevention with Customer Experience

While financial institutions are implementing stricter fraud prevention measures, they must also ensure that these efforts do not negatively impact the customer experience. “Dynamic step-up authentication and risk-based decisioning are helping banks provide better security while minimizing friction for legitimate users,” Badalamenti said, adding that AI-driven solutions can help create a seamless experience by analyzing customer behavior patterns and determining when additional authentication is necessary.

Regulatory Changes and Compliance Measures

The regulatory landscape is also evolving, with governments stepping in to hold financial institutions more accountable for fraud prevention. The UK’s liability shift in 2024 set a precedent, and similar regulatory changes are being considered in other countries.

Fooshée noted that even in the absence of strict regulations, market pressures are driving financial institutions to voluntarily reimburse scam victims to maintain their reputations. This trend suggests that institutions are recognizing the importance of protecting their customers beyond mere compliance requirements.

What Is the Future of Fraud in 2025 and Beyond

Looking ahead, fraud trends are expected to continue evolving at an unprecedented pace. With generative AI becoming more accessible, fraudsters will find new ways to exploit technology – and financial institutions, regulators, and consumers must work together to stay ahead of emerging threats. Financial institutions are also investing heavily in AI-driven fraud detection, real-time transaction monitoring, and customer education programs to mitigate risk.

Mitchell remains optimistic. “While fraud is getting more sophisticated, the industry is fighting back with better collaboration, stronger AI defenses, and increased focus on protecting consumers,” he said, noting that the rise of anti-scam programs, enhanced fraud analytics, and real-time identity verification solutions signal that progress is being made. By leveraging AI responsibly, improving information-sharing practices, and enhancing fraud detection capabilities, the industry can make significant strides in reducing financial crime in 2025 and beyond.

Watch the full webinar on-demand. To learn more about DataVisor’s AI-powered fraud and risk platform, visit https://www.datavisor.com/products/fraud-platform/.