State of Fraud 2025: Rising Losses and Climbing Costs
As we close in on the end of the year, and the busiest season for fraud industry conferences and trade shows, you’ll hear a lot of talk about high-level trends. AI this, deepfakes that. But these eye-catching headlines are often symptoms of deeper challenges that have been brewing for years.
When Experian published its 2025 U.S. Identity & Fraud Report, which surveyed over 2,000 consumers and 200 businesses, they highlighted some of the biggest fraud challenges facing organizations today. They’re the things you’ll hear a lot of this fall, and it inspired our team to dig deeper: for all these big problems, what’s really driving them? What can we tell fraud leaders who want to solve them?
Over the next few weeks, we’ll dive into the State of Fraud heading into 2026, digging into the challenges that caught our attention the most. I’ll begin with the most pressing: the rising financial impact of fraud.
The challenge: increasing losses and climbing costs
In 2025, 60% of businesses are reporting increased fraud losses. Every additional dollar lost to fraud is compounded by the operational expenses that accompany it: U.S. financial institutions spend over $4 in remediation costs for every $1 in fraud losses. On top of it all, businesses are trying to limit losses by increasing up-front spending on fraud prevention — 70% say they’re increasing their fraud prevention budgets this year.
Simply put: fraud is draining businesses’ budgets. It’s diverting resources, both financial and personnel, away from other initiatives. Whether it’s directly felt through losses or a byproduct of additional security that turns customers away, fraud is placing a barrier between businesses and their growth goals.
The driving force: strategic misalignment on AI and security
AI’s impact on fraud is well-documented. Our data shows that fraud attacks tripled in intensity last year, a surge mainly driven by bots. Advanced bots and other AI-powered fraud tools are creating an attack landscape that’s increasingly deceptive, dangerous, and unrelenting.
That’s not new news for businesses. But are they doing enough to respond? Even though leaders are reporting AI as a top concern, most are still prioritizing revenue over fraud prevention. Growth is great — but the cost of fraud and reputational damage of it only slows expansion. The best way to grow is to do so securely; it’s clear that businesses aren’t aligned on the right way to accomplish that, and they’re paying the price for it.
The solution: modern, friction-free fraud prevention
Too often, security and expansion are talked about in contradiction. Sure, there’s a trade-off if security relies on friction-filled step-up tools and privacy-intensive data requests. But a modern approach to fraud prevention doesn’t involve sacrifices; there are tools that can keep fraudsters at bay without standing in good users’ way.
Behavioral analytics is one of them. In a fraud stack with behavior at the top of the funnel, high-risk users are passively spotted and accurately stopped, while genuine users can bypass additional checks and move forward with reduced friction. Data costs and manual reviews are reduced, and genuine consumers are rewarded with a more seamless experience. Fraud teams are happy because attackers are kept out, and the rest of the businesses can watch as customers roll in through a more streamlined experience.
Next week, I’ll pass it off to my teammates for a breakdown of another big challenge: the growing trust gap between businesses and consumers. Want to be the first to read their thoughts? Subscribe to our blog — and while you wait, grab a copy of Experian’s 2025 U.S. Identity & Fraud Report for more on today’s fraud landscape.
