Banks Face Fraud Spike As Scams Stress Legacy Systems

The “2025 State of Fraud and Financial Crime in the United States” report, a PYMNTS Intelligence report commissioned by Block, reveals that the financial industry is navigating an increasingly sophisticated and dynamic threat landscape. The primary trend observed is a significant surge in unauthorized-party fraud, reversing the pattern seen in the previous year. Unauthorized-party schemes, driven by credential theft and account takeovers, now account for 71% of all incidents and dollar losses. This shift underscores the growing need for adaptive, intelligence-driven defenses among financial institutions (FIs).

Average fraud loss rates across the industry rose modestly to 0.8 basis points, though this average masks sharp disparities. Notably, large banks reported losses nearly four times the industry average, signaling greater exposure due to scale and speed. The fact that 46% of financial institutions report an increase in the sophistication of fraud schemes further highlights the increased complexity and risk. Institutions are concurrently managing overlapping regulatory requirements (47%) and operational pressures tied to faster, more diverse payment systems (41%).

In response to these threats, 68% of firms plan to increase their fraud-detection spending year over year. The report identifies artificial intelligence and advanced behavioral analytics as the defining tools of modern fraud defense, enabling institutions to adopt a balanced approach that is both proactive (anticipating fraud) and reactive (accelerated response).

However, the cost of fraud extends far beyond direct financial losses. Half of institutions report damage to customer loyalty, and nearly as many cite reputational harm and lost business opportunities, emphasizing that fraud now poses a significant threat to long-term growth and trust. Future investment strategies focus on continuous modernization, hybrid defense models that combine AI and cloud infrastructure, and improved customer communication to reinforce security and trust.

In “2025 State of Fraud and Financial Crime in the United States,” learn how:

Unauthorized fraud is growing: Unauthorized-party fraud (e.g., account takeovers, credential theft) surged to represent 71% of all incidents and dollar losses, reversing previous trends.

AI serves as an essential defense: Widespread integration of AI and behavioral analytics is transforming fraud defense from reactive, rules-based systems into adaptive, intelligence-driven capabilities.

Consumer trust suffers: The true impact of fraud is on the customer, including damaged customer loyalty (50%) and reputational harm (44%), demonstrating a threat to long-term growth beyond financial losses.

Download the Report 2025 State of Fraud and Financial Crime in the United States

About the Report

“2025 State of Fraud and Financial Crime in the United States,” a PYMNTS Intelligence report commissioned by Block (CashApp), is based on a survey of 200 executives working at U.S. financial institutions with assets of at least $1 billion and at FinTechs with at least $100 million in annual revenues in 2024. It was conducted from Sept. 30, 2025, to Oct. 15, 2025. To ensure representativeness, we weighted all bank and credit union responses by national asset-size distribution. The respondents had deep knowledge and leadership responsibilities in: compliance and operations, fraud and risk operations, fraud analysis or strategy, or trust and safety analyst or operations. All insights reflect PYMNTS’ independently collected, double-blind survey data and analysis. It’s possible that Block was surveyed, but neither PYMNTS nor Block would have known, removing the potential for bias.