Fraud is evolving at an unprecedented pace, and community banks and credit unions are increasingly finding themselves in the crosshairs of bad actors. While some fraud schemes are executed by sophisticated and well-organized criminal operations, many are carried out by individuals (or small groups) using readily available tools and tactics.
With advancements in technology, AI, automation, and social engineering, fraudsters of varying skill levels are finding new ways to exploit financial institutions and their accountholders. This year, we are seeing a sharp rise in targeted fraud schemes that leverage emerging technologies, capitalize on gaps in digital security, and exploit human vulnerabilities. Understanding these trends is no longer optional. It is essential for institutions that want to stay ahead of financial crime and protect their communities!
Key 2025 Fraud Trends
Check Fraud
Check fraud has plagued financial institutions of all shapes and sizes since the inception of the check itself, and in 2025 we expect to see that trend to rise. In addition to traditional means of check fraud (mailbox fishing/stolen arrow keys, check alteration, forged signatures, check washing, etc.), we are seeing fraudsters take advantage of AI-generated forgeries to bypass traditional verification systems. AI tools enable fraudsters to create highly convincing counterfeit checks, while remote deposit capture has inadvertently provided new avenues for exploitation.
Fraudsters are leveraging these AI-generated check forgeries that mimic legitimate handwriting and security features. Dark web marketplaces have also made stolen check images and account details much more accessible. To combat this, financial institutions should deploy AI-powered image recognition to identify discrepancies in checks and tighten controls around remote deposit capture with more robust fraud monitoring
Account Takeover (ATO) Fraud
Account takeover fraud remains a top threat in 2025, with fraudsters taking advantage of emerging channels like mobile wallets, P2P payment apps, and cryptocurrency platforms. According to the Federal Trade Commission, ATO incidents are increasing year over year, largely driven by social engineering attacks and credential-stuffing techniques.
The increased reliance on digital platforms has created more points of vulnerability, and fraudsters are leveraging AI to create more personalized and convincing phishing attempts. They also employ automated credential stuffing bots to test stolen login info (at scale) and AI generated deepfake voice calls to mimic legitimate accountholders. To make it a fair fight, financial institutions can strengthen security for mobile and digital banking channels with multifactor authentication, behavioral biometrics, and also implement solutions to detect unusual login patterns and flag potential compromises.
Synthetic Identity Fraud
According to the Deloitte Center for Financial Services, synthetic identity fraud remains one of the fastest growing financial crimes, with estimated losses generating at least $23 billion annually in the U.S. alone by 2030. Fraudsters use automation to create and scale fake identities across multiple platforms, which makes detection that much more challenging. These automated tools can generate realistic identities in bulk, allowing fraudsters to exploit gaps in identity verification processes, particularly for digital accounts. They use AI-generated “fake IDs” and documents that pass traditional verification methods and bots that repeatedly submit fraudulent applications with slight variations. To help mitigate this threat, financial institutions can invest in machine learning models to detect inconsistencies in application data and leverage consortium-based information sharing to identify synthetic profiles across institutions. Fighting fraud on your own is a lonely battle!
Payment Fraud
With the rise of faster payment systems in 2025, fraudsters are focusing on exploiting these faster transactions. Faster payments = faster fraud! The FBI’s Internet Crime Report highlights a significant increase in real-time payment fraud, including push payment scams and BEC schemes targeting community banks. Instant payments provide little time to detect and block fraudulent transactions, and fraudsters are using deepfake technology to impersonate executives and authorize illegitimate transfers (among other schemes).
Their tools include AI-generated deepfake videos used in business email compromise (BEC) scams and malware that intercepts and alters payment details in real time. To help mitigate this, institutions can implement real-time fraud detection tools to monitor payment activity and educate employees and accountholders about verifying payment requests – especially those involving large sums of money.
Elder Abuse Fraud
As more older adults adopt digital banking this year, fraudsters are adapting their tactics to target this demographic and take advantage of their lack of familiarity with technology. Scams involving tech support impersonation, fake investment opportunities, law enforcement impersonation, and romance schemes have become commonplace. According to a study conducted by AARP, victims of elder financial exploitation lose $28.3 billion annually.
Older adults are more likely to fall victim to sophisticated scams due to their lack of understanding of emerging technologies. Fraudsters are using AI-generated voices and emails to build trust with their victims. They are also using AI-driven chatbots impersonating customer service representatives and remote access trojans (RATs) used to gain control of victims’ devices. Financial institutions can help prevent elder abuse fraud by providing targeted education for older accountholders on recognizing and avoiding scams, as well as training staff to detect and report signs of elder abuse.
Proactively Addressing 2025 Fraud Trends
Here are a few things you can do to help protect your institution and your accountholders:
- Leverage AI and Machine Learning: Adopt advanced technologies to detect and respond to fraud. AI-driven fraud detection models can analyze vast amounts of data much faster than any human, as well as spotting anomalies that a human might miss. By integrating AI with a risk-based approach, institutions can reduce friction for legitimate accountholders while blocking fraudulent activity before it causes harm.
- Focus on Education: Regularly update your employees and accountholders on emerging threats and how to protect themselves. Like the old G.I. Joe PSA used to say “Knowing is half the battle!”
- Collaborate Across the Industry: Share data, information, and best practices with other institutions to stay ahead of fraudsters. Fraudsters operate across multiple FIs and financial platforms, making collaboration critical. By joining fraud intelligence networks and participating in industry-wide data sharing initiatives, FIs can gain early warnings about new attack vectors and trends, strengthening collective defenses.
- Implement Transaction Monitoring Solutions: Acquiring a fraud and BSA monitoring solution can help your institution identify suspicious patterns of behavior and prevent fraudulent transactions before they cause harm. If a dedicated solution isn’t feasible, developing internal processes and manual reviews tailored to your institution’s specific risks is a step in the right direction.
Addressing 2025 fraud trends requires a multi-layered approach. Financial institutions must invest in modern fraud detection technology, but technology alone is not enough. A strong fraud prevention strategy (one that is continually refined) is fundamental to your success, as it fosters a culture of awareness among staff and accountholders to help ensure everyone remains informed. By proactively implementing these strategies, institutions can not only protect their accountholders and assets, but also maintain trust in an increasingly digital world.
The key to staying ahead of fraudsters is agility – adapting quickly to emerging threats and reinforcing safeguards before vulnerabilities can be exploited. The fight against financial crime is ongoing, but with the right combination of technology, education, and collaboration, you and your institution can turn the tide in your favor!
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