Fraud is growing more pervasive, more adaptive and harder to contain. Financial institutions are responding by reworking how detection, prevention and customer protection are built into payment systems.
The Federal Reserve Financial Services Risk Officer Survey, released Tuesday (April 28), draws on responses from more than 400 institutions. It presents a system-wide view of that pressure. The Fed found that fraud is rising across debit, check, ACH and wire channels. The drivers include evolving criminal tactics, greater digital exposure and sustained scam activity targeting both customers and institutions.
Debit card fraud is nearly universal. Check fraud continues a multiyear resurgence. Institutions also report rising exposure to account holder scams, business email compromise and unauthorized ACH debits, along with wire fraud tied to account takeover and mule networks.
No major fraud category is declining. As a result, institutions face pressure from multiple directions at once — impersonation, credential compromise and unauthorized access are all advancing simultaneously.
Detection adds to the strain. Many institutions still identify fraud only after losses occur. Mule accounts are a particular challenge, since funds are often depleted before anyone can intervene.
How Unauthorized Access Is Driving the Majority of Fraud Losses
PYMNTS Intelligence findings reinforce the Fed’s observations. “The 2025 State of Fraud and Financial Crime in the United States” report, produced in partnership with Block, finds that unauthorized-party fraud now accounts for 71% of incidents and losses.
This reflects a shift in how fraud operators work. Rather than manipulating users into initiating transactions, attackers now gain direct access to accounts. That changes the defensive posture institutions need. Prevention must happen earlier — often before a transaction begins.
The consequences extend beyond financial loss. Half of institutions report negative effects on customer loyalty. Significant shares also cite reputational damage and lost business.
The Fed survey aligns with these findings. Both datasets point to identity and access as the central battleground, with impersonation and credential-driven attacks rising across payment channels.
How Financial Institutions Are Using Technology to Fight Fraud
Facing these pressures, institutions are investing more in technology. PYMNTS Intelligence reports that 68% of institutions increased fraud detection spending, with many shifting toward AI-driven and behavioral analytics tools.
These tools analyze transaction patterns, user behavior and contextual signals to spot anomalies that may signal account takeover or fraudulent intent. The goal is to move from reactive identification to earlier detection within the transaction cycle.
The Fed survey points to similar approaches. Institutions cite real-time monitoring, enhanced authentication and machine learning models as key parts of their fraud strategy. Additional measures include biometric verification, transaction monitoring and customer education to reduce vulnerability to social engineering.
Persistent gaps remain, however. Detection is still heavily manual at many institutions. System integration challenges slow response times. Information sharing across institutions is often limited. Together, these factors delay identification and reduce recovery rates.
Why Fragmented Defenses Are Failing Against Modern Fraud
The combined findings point to a core problem: fragmented defenses. Effective fraud mitigation requires coordination across systems, channels and institutions. Detection tools must align with operational processes.
Institutions that rely on isolated controls or post-transaction review are less likely to contain losses. Fraud moves fast and hits multiple touchpoints at once. By contrast, institutions that integrate analytics, monitoring and response into a continuous process are better positioned to catch and address threats before they escalate.
