Scammers Share of Banking Fraud Losses Doubles to 27%

The escalating sophistication of financial scams is forcing financial institutions to re-evaluate their defense strategies, as new research reveals that criminals are now mimicking legitimate business tactics to defraud consumers.

A recent report, “How Scammers Tailor Financial Scams to Individual Consumer Vulnerabilities,” produced by PYMNTS Intelligence in collaboration with Featurespace, sheds light on the evolving landscape of financial fraud. This study defines financial scams as a type of fraud involving misleading victims to gain access to their accounts, personal information or trust to obtain money, specifically considering only those resulting in financial losses.

The findings are stark: 3 in 10 U.S. consumers, roughly 77 million individuals, have lost money to a scam in the last five years, with most victims losing more than $500, and many suffering thousands in financial damage. This trend marks a significant increase, with scams representing 27% of total dollars lost by financial institutions to fraud in the U.S. in 2024, up from 12% in 2023.

Scammers are innovating and fine-tuning their tactics by drawing from the toolkits of legitimate businesses, personalizing their offerings, and customizing how they contact and convince victims to engage. They exploit consumers’ unique circumstances and vulnerabilities, with victims cutting across demographics including age, education, and income. This growing sophistication necessitates a deeper understanding of scammer methodologies beyond just their prevalence.

Beyond the overall impact, the report details specific strategic adaptations by scammers:

• Tailored initial contact methods: Scammers meticulously select initial contact points, mirroring legitimate communication channels to build credibility and maximize engagement with potential victims. They adapt to generational habits, for instance, initiating 21% of scams that target Gen Z consumers via social media. In contrast, older generations like baby boomers are more frequently contacted through channels they trust, such as email (23% of scams) and phone calls (21% of scams). Furthermore, the contact method often aligns with the scam type itself: online platforms account for 42% of eCommerce scam contacts, while phone calls dominate debt collection schemes at 39% of initial contacts.
• Strategic compliance tactics: Once contact is established, scammers employ carefully chosen tactics to manipulate victims into compliance, often involving building trust, leveraging fear or offering financial incentives. Posing as a trusted entity is particularly effective, reported by 86% of job listing scam victims and 83% of debt collection scam victims. Conversely, coercion and threats are more common in identity theft scams, reported by 22% of victims, and significantly more prevalent in government benefits scams, reported by 42% of victims. The promise of financial rewards is a primary factor in sweepstakes and investment scams.
• Generational tactic adaptation: Scammers significantly adjust the complexity and range of manipulative tactics based on the victim’s generation. Younger individuals, such as Gen Z, report experiencing a broader array of manipulative tactics, often within more elaborate scenarios designed to overwhelm them. In contrast, older consumers are frequently targeted with simpler marketplace scams that require less advanced manipulative strategies, aligning with observed differences in perceived skepticism or susceptibility across age groups.

This detailed analysis of scammer strategies underscores the urgent need for financial institutions to implement dynamic defenses, including advanced analytics and behavioral monitoring, to stay ahead of these evolving threats. Such proactive measures are critical not only for protecting customers’ finances but also for safeguarding consumer trust and confidence in the broader financial system, which scammers actively undermine. The report also highlights the importance of empowering individuals through scenario-based training to recognize and resist manipulation.

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