Last week, Abrigo, a provider of financial crime prevention and risk management solutions for U.S. financial institutions, today announced survey results revealing how Americans feel about financial fraud, their fears about AI’s impact on fraud, and some enduring misconceptions. The vast majority of Americans (90%) are worried about the rise in fraud, while 51% are “extremely concerned,” and another 39% are “somewhat concerned.”
Additional data backs the concern. According to the FTC, American consumers lost $10 billion to fraud scams in 2023, up from $3.5 billion in 2020. Another study showed it costs North American financial institutions $4.41 for every dollar lost to a fraudster.
Fears about AI’s sophistication and its impact on fraud are also abundant. The survey found that 68% of Americans are concerned that financial fraud attempts will increase with AI advancement, and 74% believe AI advancement will increase the success of those attempts.
“Americans are expressing deep concern about rising fraud and the fear that AI advancements will add to rising fraud rates. Financial crime is always evolving, and that means we will need vigilant, ethical, AI-assisted crime-fighters to stop criminals using AI,” said Ravi Nemalikanti, CTO at Abrigo.
“Both consumers and financial institutions must guard against new, sophisticated AI-backed methods of attack,” added Jay Blandford, CEO at Abrigo. “Criminals are already utilizing AI for fraud schemes, so financial institutions must be able to leverage the same tools within their fraud solutions to stay on top of crime. Abrigo continues to focus on driving efficiency in fraud detection with AI, including machine learning.”
Close to half, 45%, self-report having been the victim of financial fraud. Among those who were victims, the top three types of fraud experienced were credit card theft (53%), ACH or electronic payment fraud (19%), and check fraud (17%). Roughly one in four, 24%, lost $5,000 or more.
Americans are most concerned about internet scams and identity theft, which often originate with check fraud. Responders also expressed widespread concern about major financial crimes like money laundering, where 71% said they were somewhat concerned (45%) or extremely concerned (26%) about money laundering in the U.S.
That’s a powerful statistic as cryptocurrency reemerges and money launderers increasingly turn to crypto. Federal financial regulators are also updating anti-money laundering (AML) requirements for financial institutions and encouraging innovative approaches to compliance.
“As AI amplifies attacks, it’s more important than ever for FinCrime professionals at banks, credit unions, and other financial institutions to understand the specific methods, patterns, and techniques criminals use in money laundering and be prepared to detect this activity in transactions with tools and approaches that can keep up,” said Blandford.
According to the survey, 36% believe that 75% to 100% of all fraudulent transactions can be recovered. However, the reality is quite different. The 2023 Association for Financial Professionals (AFP) payments fraud survey found that “a majority of organizations recoup less than 10% of funds stolen due to fraud.”
The Abrigo survey revealed another critical misconception: While 53% of Americans believe credit card theft is the most common and what they fear most (43%), check fraud is the bigger liability for banks.
Financial institutions stand to lose business after customers experience fraud: 16% of respondents switched financial institutions after becoming fraud victims. A majority of Americans, 58%, said they would be more likely to minimize their banking relationship with a financial institution if they were the victim of fraud.