As digital transactions play a role in the financial landscape, financial institutions invest heavily in fraud prevention tools.
Efforts to combat fraud in routine digital payments have been successful, but a new challenge has emerged in the form of social engineering scams.
According to the PYMNTS Intelligence report “The State of Fraud and Financial Crime in the U.S.: What FIs Need to Know,” these scams exploit consumer trust instead of bypassing technical safeguards. They led to an increase in fraud levels in 2024. The report showed how FIs are adjusting their approaches to fraud prevention to address this threat.
In 2024, scams became the leading form of fraud, surpassing digital payment fraud. The share of scam-related fraud increased by 56%, and financial losses from scams rose 121%, according to the report. Scams now account for 23% of all fraudulent transactions, with relationship/trust and product/service scams responsible for most losses. These scams manipulate individuals into authorizing fraudulent transactions, often using deceptive tactics. Additionally, fraud involving compromised credentials, where individuals are tricked into revealing account details, is also on the rise.
More Info