A Few Scams Drive the Damage
Though fraud tactics multiply, three categories dominate: identity theft, fake debt collection and fake eCommerce marketplaces. The report said more than 80% of scam incidents involve some form of impersonation, and nearly two-thirds of victims send funds within 24 hours.
Identity theft remains especially pernicious: fraudsters use stolen or synthetic identities to open accounts or initiate transfers. Fake debt collection scams target consumers with phony demands, often via calls, texts or emails demanding payment for alleged past-due balances. Fake online marketplaces lure shoppers with enticing deals, then fail to deliver goods or redirect payments into fraudulent accounts.
The PYMNTS/Block report shows that victims of fake eCommerce marketplace scams include significant shares of older consumers — baby boomers and seniors — but the younger segments are increasingly impacted.
Demographics Contradict Conventional Wisdom
Gym-goers in their twenties? Millennials? Yes, they are now the highest-risk groups. The study finds millennials show scam exposure of about 24%, followed by Gen Z at 22%, compared with just 14% among baby boomers and seniors. College-educated consumers record an exposure rate of 22% versus 18% for those without a college degree.
Income also influences risk: Higher-income households more often experience fake marketplace and identity theft scams, likely because their accounts hold more money or they engage in more online activity. Channel exposure also shifts: For younger consumers, social media-based contact is a major vector; for older consumers, phone and email remain common.
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As the holiday season approaches, the volume and velocity of online commerce increases, creating richer opportunities for scammers. Fake eCommerce platforms become especially attractive when consumers rush for deals or unfamiliar brands.
Meanwhile, platforms with sub-par verification of sellers or merchants may inadvertently enable shady actors posing as legitimate merchants. Commerce platforms and payments providers that fail to implement robust seller-onboarding (know your business, or KYB) and buyer-verification (know your customer, or KYC) procedures expose themselves and their users to heightened risk.
KYC and KYB in the Forefront
In the last three months, PYMNTS has highlighted the vital role of both KYC and KYB. For example, as PYMNTS reported, 42% of suspicious activities reported by financial institutions relate to identity fraud, and that FinTechs are under rising compliance pressure.
Another, recent PYMNTS Intelligence report underscores the revenue drag from weak identity verification systems and explains how KYC and KYB deficiencies undermine onboarding and fraud detection.
“False declines, which is when legitimate consumers are labeled as problematic, are a major shortcoming of inadequate digital identity systems,” PYMNTS wrote, and the average company surveyed loses 3.1% of their annual top line due to inadequate digital identity systems.
In a featured interview, Matthew Pearce, vice president of fraud risk management and dispute operations at i2c, told PYMNTS that financial institutions must treat AI-driven identity/fraud models and verification and business legitimacy checks into onboarding and ongoing monitoring.
“Leading institutions measure performance across multiple dimensions and tune models continuously to maintain that equilibrium. … Modern defense blends real-time anomaly detection with controlled retraining cycles,” Pearce said, noting that “agility can be a true differentiator.”
These insights align: Only by layering KYC and KYB can platforms close the open door that scam networks exploit. Especially in a holiday surge environment, the margin for verification error collapses.
For payments networks, financial institutions and commerce platforms, the stakes are high. They must elevate KYC and KYB from compliance checkboxes to strategic front-line assets. Investment in identity verification, business authenticity checks, ongoing monitoring and friction-aware fraud detection may not just reduce losses. They may also preserve consumer trust and platform legitimacy.
