How fraud is committed across traditional and emerging payment systems
Financial criminals continuously adapt their methods, taking advantage of system vulnerabilities and human error. Some of the most common payment fraud tactics include:
- Check fraud – Altering, forging, or counterfeiting checks to illegally access funds.
- Wire fraud – Impersonating account holders or businesses to divert wire transfers to fraudulent accounts.
- Account takeover fraud – Gaining unauthorized access to customer accounts through phishing, credential stuffing, or malware.
- Mule networks – Using individuals or businesses to move stolen funds, often under the guise of legitimate transactions.
New and faster payment systems have some advantages over the more traditional systems that fraud teams have monitored for decades. For example, no checks or cards means less opportunity for criminals to steal valuable customer information from these physical items. However, with faster payments comes greater fraud risk. The Federal Trade Commission (FTC) reported that in 2024, U.S. consumers lost over $12.5 billion to fraud, a record high and a 25% increase over 2023. Unlike traditional transactions that allow time for review and reversal, instant payments mean that fraudulent transfers can be executed and withdrawn within seconds, making recovery difficult.
What's more, convincing account holders to authorize fraudulent transactions through confidence scams is a social engineering tactic that does not discriminate based on payment system. Fraud schemes that rely on building relationships with victims first are perhaps more dangerous when employed alongside payment systems that conduct instant transactions, giving victims less time to think about their actions and financial institutions less time to question them. The use of new technology like generative AI in fraud scams has made deceptive communication even more difficult for unsuspecting customers to detect.
