Common fraud schemes
Check fraud
Check fraud is one of the most concerning fraud trends for community banks in 2025. According to a 2024 Abrigo Fraud Survey, 61% of Americans still write checks, and incidents of fraud and the resulting losses remain high. The FBI estimates that 500 million fraudulent checks annually total $18 billion in annual losses.
Phishing scams
Phishing scams involve fraudsters impersonating legitimate entities—such as banks, government agencies, well-known companies, or business contacts—to trick individuals into providing sensitive information like login credentials, Social Security numbers, or financial details. Scammers may utilize a technique called “spoofing” to disguise their phone numbers, email addresses, or websites to appear as trusted sources. In one variation, phishing scammers may pose as government officials—such as IRS agents, Social Security representatives, or law enforcement officers—and threaten victims with arrest, deportation, or fines unless they make an immediate payment or provide personal information.
These scams often come through email, but thanks to new AI-driven fraud methods, they can also occur via text (smishing) or voice calls (vishing). In one popular variation known as business email compromise (BEC), cybercriminals impersonate executives, vendors, or financial institutions via email, deceiving businesses into wiring money to fraudulent accounts.
Investment schemes:
Investment scams lure victims with promises of high returns and little to no risk, only to steal their money. Variations include:
- Pig butchering scams – Scammers build relationships with victims through social media or dating apps, persuading them to invest in cryptocurrency or other financial opportunities. Once trust is established and investments increase, the scammer disappears with the funds.
- Nigerian letter (419 fraud): The scammer claims to need help transferring large sums of money out of Nigeria and promises the victim a share of the funds in exchange for financial assistance.
- Ponzi schemes – A fraudulent investment operation that pays returns to earlier investors using money from new investors rather than legitimate profits. Eventually, the scheme collapses when new funds dry up.
- Pyramid schemes – Similar to Ponzi schemes, these scams require participants to recruit new investors to earn money. The model is unsustainable and often collapses, leaving late-stage investors with significant losses.
Fraudsters combine real and fake personally identifiable information (PII) to create fictitious identities used to open bank accounts, secure loans, or conduct other fraudulent activities. Because these identities blend real and fake data, they can be challenging to detect.
A scammer assumes a fake online persona, builds an emotional connection with a victim, and ultimately convinces them to send money, gifts, or personal information under pretenses. These scams often take place on dating apps and social media.
Skimming
Fraudsters install hidden devices on ATMs, point-of-sale (POS) terminals, or fuel pumps to steal credit or debit card information. Some devices also capture PINs, allowing criminals to withdraw cash or make fraudulent purchases.
Grandparent scams
Scammers pose as a grandchild or another relative in distress, urgently requesting money for an emergency, such as bail, hospital bills, or travel expenses. They often prey on older adults’ emotions to bypass skepticism.
Sweepstakes/charity/lottery scams
Victims are told they have won a lottery or sweepstakes but must pay taxes or fees to claim their prize. In charity scams, fraudsters pretend to represent legitimate charities to solicit donations, often exploiting natural disasters or tragic events to manipulate victims.
Home repair scams
Criminals approach homeowners offering repair or improvement services, demand upfront payment, and either perform substandard work or disappear without completing the job. These scams are common after storms or natural disasters when homeowners urgently need repairs.
