Fraud and Chargeback Trends to Watch in 2025
As we navigate through 2025, the landscape of fraud and chargebacks continues to evolve, presenting new challenges for businesses and consumers alike. Staying informed about these emerging trends is crucial for implementing effective prevention and mitigation
strategies.
1. Surge in AI-Driven Fraud
The integration of generative artificial intelligence (GenAI) into fraudulent schemes has become increasingly prevalent. Scammers are utilizing GenAI to create synthetic identities, craft convincing phishing emails, and develop deepfake audio and video content,
making their deceptions more convincing and harder to detect. The Financial Industry Regulatory Authority (FINRA) has highlighted concerns over the use of GenAI in sophisticated scams targeting financial institutions.
2. Increase in Chargeback Volumes
Chargebacks are projected to rise significantly, with reports indicating an expected increase of over 40% from 2023 to 2026. This trend is attributed to factors such as the surge in online shopping, the convenience of initiating chargebacks, and the growing
sophistication of fraudsters. Merchants need to be proactive in implementing robust chargeback management strategies to protect their revenue.
3. Growth of Synthetic Identity Fraud
Synthetic identity fraud, where criminals combine real and fictitious information to create new identities, is anticipated to become a substantial challenge. Advancements in technology have made it easier for fraudsters to develop hyper-realistic synthetic
identities, posing significant risks to businesses and financial institutions.
4. Evolution of Phishing and Social Engineering Attacks
Phishing scams are becoming more sophisticated, often leveraging AI to generate personalized messages that mimic trusted entities. Additionally, social engineering tactics are evolving, with scammers using advanced data-mining techniques to craft believable
scenarios that trick individuals into divulging personal information.
5. Rise of Application-to-Person (A2P) Messaging Fraud
Fraudsters are increasingly using applications to send messages directly to individuals’ phones, engaging in phishing or spreading malware. The widespread use of mobile devices and messaging apps provides ample opportunities for scammers to exploit vulnerabilities.
6. Targeted Attacks on Businesses
Cybercriminals are conducting more targeted attacks on organizations, utilizing complex methods such as spear phishing, social engineering, and malware to infiltrate systems. These attacks are often aimed at accessing valuable data and resources, requiring
businesses to strengthen their cybersecurity measures.
7. Increase in Subscription Renewal Scams
With the proliferation of subscription services, scammers are exploiting consumers by sending fake renewal notices for services they may or may not use. The goal is to trick individuals into providing payment details or clicking on malicious links.
8. Emergence of Deepfake Technology in Fraud
Deepfake technology, which involves creating hyper-realistic but fake audio and video content, is being used by fraudsters to impersonate individuals and organizations. This technology makes it challenging to distinguish between genuine and fraudulent communications,
increasing the risk of successful scams.
9. Growth of Account Takeover (ATO) Fraud
Account takeover fraud, where criminals gain unauthorized access to user accounts, is on the rise. This type of fraud often involves the use of stolen credentials and can lead to unauthorized transactions and data breaches. Businesses must implement robust
authentication measures to combat this threat.
10. Increase in Friendly Fraud
Friendly fraud occurs when customers dispute legitimate transactions, often claiming they did not authorize a purchase or did not receive the product. This type of fraud is challenging to prove and can result in significant financial losses for merchants.
Implementing comprehensive transaction records and clear communication with customers can help mitigate this issue.
11. Expansion of Cross-Border Fraud
As global commerce expands, cross-border fraud is becoming more prevalent. Fraudsters exploit differences in regulations and security measures between countries to perpetrate scams. Businesses engaged in international transactions need to be aware of these
risks and implement appropriate safeguards.
12. Increase in Mobile Payment Fraud
The rise of mobile payment platforms has led to an increase in fraud targeting these systems. Fraudsters exploit vulnerabilities in mobile apps and payment processes to conduct unauthorized transactions. Ensuring the security of mobile payment platforms
is essential for businesses and consumers alike.
13. Growth of E-commerce Fraud
With the continued growth of e-commerce, fraudsters are developing new methods to exploit online transactions. This includes tactics such as triangulation fraud, where scammers set up fake online stores to collect payment information. Businesses must stay
vigilant and implement advanced fraud detection tools to protect against these threats.
14. Increase in Gift Card Fraud
Gift card fraud is on the rise, with scammers using various methods to steal funds from gift cards. This includes techniques such as tampering with physical cards or using bots to guess valid card numbers. Consumers and businesses should be cautious when
purchasing and handling gift cards.
15. Adoption of Advanced Fraud Prevention Solutions
In response to the evolving fraud landscape, businesses are increasingly adopting advanced fraud prevention solutions. Platforms like
Avoided.io offer intelligent chargeback management software designed to prevent, fight, and analyze chargebacks effectively. These solutions provide customizable, user-friendly interfaces and fast data analysis, helping businesses
stay ahead of fraudsters.
By staying informed about these trends and implementing comprehensive fraud prevention strategies, businesses can better protect themselves and their customers in the dynamic landscape of 2025.
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