Fraud Prevention

What Is Fraud Prevention?

Fraud prevention is the most important precaution(activity) to stop fraudulent activity before it occurs; it is done using detection, deterrence, and mitigation strategies. The combination of the prevention strategies covers areas like financial, identity, and cyber fraud. The act of fraud prevention works by identifying risks and discouraging fraud attempts. In this blog post, we’ll be talking more about how to prevent fraud, and tools you can use to protect your company and yourself.

How to Catch Fraud?

In 2025, catching fraud involves using advanced technology as well as compliance practices. AI and machine learning helps your company process and analyze large volumes of transactions in real time, detecting unusual patterns if they occur. Behavioral analytics is another tool used to spot suspicious activity. Sudden location changes, unusual login attempts, and abnormal spending behavior can be detected thanks to this tool. To support these tools, strong Know Your Customer (KYC) and anti-money laundering (AML) checks are needed. Using these will help your company verify identities as well as monitoring their transactions for potential fraud.

Why Businesses Need Fraud Prevention Activities?

Criminals are using more complex techniques and technologies to prevent you & your business from detecting fraud, your company should be ready to fight using fraud prevention activities. There are more sophisticated threats like deepfakes, phishing, and synthetic IDs which make it harder to figure out if people are real customers or not. The regulatory pressure coming from AML, GDPR, PCI DSS, and FATF standards frameworks is another reason why your company should be implementing fraud prevention measures. Non-compliance can lead to fines and legal consequences. Your company being involved with fraud will, of course, result in reputational damage. Even one case will most likely lead to losing customer trust as well as media damage.

In 2025, entrepreneur Charlie Javice was sentenced to over seven years in prison for defrauding JPMorgan Chase into acquiring her financial aid startup, Frank, for $175 million. According to the sources of Reuters, she falsely claimed that Frank had 4.25 million users, whereas the actual number was around 300,000. Javice fabricated customer data to mislead the bank during the acquisition process. Fraud prevention measures will protect you from cases like these. 

Common Trends of Fraud to Watch

Fraud techniques continue to evolve in 2025 using the ever-evolving technological tools to make it harder to detect the crime with the influencing power of AI.

Payment Fraud

Payment fraud is still an important type of fraud. Stolen card data, where criminals use your card details to make purchases; and friendly fraud, where a customer of yours disputes the purchase, they made to falsely receive a refund, also known as chargeback abuse can be given as prime examples of this fraud. 

Identity Fraud

According to the FTC, in June 2025, Walmart paid $10 million to settle Federal Trade Commission charges that it allowed scammers to use its in-store money transfer services to defraud U.S. consumers of hundreds of millions of dollars.  Identity fraud is also rising through the usage of synthetic identities and deepfake-based onboarding. According to our Sanction Scanner experts, consumers lost a total of $27.2 billion in 2024 due to identity fraud, a 19% increase from the prior year. Due to the sources of U.S Department of Justice, Amber Towndrow, leader of a nationwide $1.4 million bank fraud and identity theft scheme, pleaded guilty in March 2025 to conspiracy to commit bank fraud, aggravated identity theft, and money laundering. She used victims’ personal information to open business bank accounts, linked them to established personal accounts, and drained victim funds.  

Account Takeover

Account takeover (ATO) is another problem companies face. Criminals gain control of someone’s account through acts like credential stuffing, where they use leaked usernames and passwords from previous breaches, and phishing, where they send deceptive emails and such to users, hoping to gain their login information. Account takeover (ATO) attacks increased 24% in Q2 2024 vs Q2 2023. 

Payment Fraud

Business email compromise (BEC) is done towards companies directly. Criminals use techniques like fake invoices, fraudulent payment requests, and CEO impersonation, which most likely leads to employees transferring funds to criminals or approving sensitive deals which benefit the criminals themselves.

Internal Fraud

Internal fraud also occurs within companies, where your employees misuse their privileged access that comes to them because of their position. In Mumbai, in October 2025, an employee of a corporate gifting firm was arrested for allegedly embezzling gold coins worth ₹5.7 crore. The employee deceived the company by providing fake orders from a pharmaceutical company and pocketed the gold coins intended for corporate clients. 

Loan & Insurance Fraud

The final trend to watch for is loan and insurance fraud, where criminals submit forged documents or make false claims to obtain funds they otherwise wouldn’t deserve. 

Fraud Prevention Checklist 

There are several ways you can protect yourself against fraud. The first step to a stronger company starts with efficient onboarding and identity verification. You should be using measures like ID-biometric matching for a better result in verification, sanctions/PEP screening to make sure you’re not accepting a sanctioned customer and keeping an eye on high-risk customers, and fuzzy matching to detect duplicates in accounts. When it comes to monitoring, your company should implement real-time behavioural and transaction tracking to make sure you miss no anomalies in transactions and accounts. Applying velocity rules, conducting geolocation checks to ensure you’re not accepting people from sanctioned jurisdictions, and custom risk scoring will protect you against fraud. 

Authentication and access controls are also needed. Some examples for these are role-based access, which will help you with cases of account takeover attempts and insider fraud, session/IP monitoring, and anomaly alerts at login. For internal controls, you should be segregating duties and conducting regular fraud awareness training. Your company should be paying more attention to reporting as well. Detailed reporting coupled with audit readiness involving timestamped logs and STR/SAR procedures will protect you against fraud cases that might’ve occurred within your company. Finally, a post-incident response plan where you notify users who were affected as well as compensation protocols should be implemented accordingly.

Best Technologies for Fraud Prevention

With the ever-evolving technology helping criminals create more complex structures for fraud, your company should be implementing the necessary tools to prevent itself against fraud. Your company’s KYC protocols should be modernized using biometric ID verification, eKYC, and video onboarding. These help you confirm the identities of your customers without the added manual labor, leading to reduced risk of fake or stolen identities. Multi-factor authentication (MFA) is another recommendation, since it creates another layer for criminals to get through. Adding to these, AI-powered fraud monitoring will help you prevent and detect fraud after onboarding and login. This process uses real-time anomaly detection to spot suspicious activity or unusual behavior patterns.

Leading Tools for Fraud Detection

There are lots of tools to choose from when it comes to fraud detection. Transaction monitoring solutions like Sanction Scanner will provide you with rule-based and behavioral analysis to flag suspicious activity in real time. Identity verification providers can help you implement biometrics and liveness detection which will prevent fake or stolen identities. Device behaviour analytics, which includes fingerprinting and input pattern tracking, will help detect unusual access attempts. Blacklist screening is another tool that helps check customers against PEP, sanctions lists and watchlists. Machine learning models will help detect hidden patterns and anomalies that traditional methods most likely will miss.  

Fraud Prevention in Different Industries

Fraud prevention details can change between industries, and we’ll be analyzing the differences now. In banking and fintech, AML/KYC systems are crucial. Real-time transaction monitoring, behavioral analytics, and biometric verification is used frequently and the results show improvement. Financial institutions using AI-driven AML platforms report accuracy improvements of up to 94% in detection and large drops in false positives.  E-commerce platforms benefit from using chargeback tools and fraud scoring systems. Another sector affected by fraud is healthcare, and the analytic solutions implemented by these institutions improve the efficiency of billing and claims processes. Telecom companies focus on identity verification and SIM-swap protection to prevent fraud. Finally, crypto and Web3 platforms use wallet screening and fraud prevention tools since the industry is growing rapidly.