Fraud Victim Support As fraud schemes evolve in complexity and scope, financial institutions are called upon to do more than just detect and prevent illicit activity. Banks and credit unions often also serve as first responders when individuals or businesses fall victim to financial fraud. Institutions that respond with urgency and empathy to support victims of fraud can rebuild trust, restore confidence and reinforce long-term relationships with clients. But fraud victim support is about more than recouping financial loss. Understanding the common fraud schemes clients may encounter and taking an intentional approach to assist in the aftermath demonstrates an institution’s values, dedication to client care and role as a trusted advisor within the community. The Growing Cost of Fraud Reported fraud losses exceeded $12.5 billion in 2024, according to the Federal Trade Commission (FTC). The FBI documented an even higher total loss of over $16.6 billion across 859,000 complaints. These figures speak not only to the scale of financial harm but to the emotional toll these crimes leave behind. The volume and impact of fraud are increasing across all channels. In 2024, investment scams topped the list in financial damage, with $5.7 billion in reported losses. Imposter scams followed closely at nearly $3 billion. Criminals prey on trusting and vulnerable people, and they continue to leverage digital platforms to initiate contact via email, phone or text, and move funds through cryptocurrency, bank transfers or wire services. According to the FBI, phishing scams were the most frequently reported. However, business email compromise and investment fraud caused the most significant monetary damage. These trends highlight the urgent need for comprehensive fraud victim support programs that go beyond the basics of account recovery. Understanding the Scope of Fraud Financial institutions must first understand the various forms of fraud affecting their clients to deliver meaningful assistance. Some of the most prevalent methods include: • Cybercrime Attacks: Cybercrime attacks occur approximately every 11 seconds, costing organizations an average of $13 million per incident. Small businesses are especially vulnerable due to limited cybersecurity infrastructure. • Consumer Fraud: Consumer fraud takes many forms, including synthetic identity theft, spoofing, romance scams and grandparent scams. These often target the elderly and financially inexperienced. • Business and Investment Fraud Schemes: Scams such as Ponzi operations, business email compromise and wire fraud continue to result in insignificant losses for commercial clients. • “Pig Butchering”: A particularly alarming emerging scam is known among criminals as “pig butchering” because victims are deceived over time through emotional manipulation before being persuaded to make large financial transfers. Each scheme can leave a trail of emotional distress and financial disruption. A thoughtful, informed approach to fraud victim support is essential to help affected individuals navigate the aftermath. A Layered Approach to Fraud Victim Support 1. Prevention Through Education and Technology Preventing fraud begins with awareness. Banks and credit unions can help clients identify red flags by offering regular educational materials across digital and in-person channels. Topics include the creation of secure passwords, the identification of phishing attempts and safe usage of peer-to-peer payment apps. Technology also plays a pivotal role in prevention. Sophisticated fraud detection tools incorporating artificial intelligence and behavioral analytics can monitor suspicious activity in real-time. Institutions can also empower their clients with biometric login, multi-factor authentication and real-time fraud alerts. 2. Helping Clients Create a Response Plan Helping clients prepare a response plan before fraud occurs can reduce confusion and stress if the worst happens. Encourage clients to keep a written checklist that includes how to report fraud to their financial institutions, contact information for the FTC and FBI, and steps for freezing credit with the major bureaus. The plan should also cover resetting login credentials and enabling fraud alerts. Reviewing this plan regularly gives clients confidence that they know what to do and who to call. It is a simple way to support a long-term client relationship. HOW FINANCIAL INSTITUTIONS CAN RESPOND AND RESTORE TRUST By Terri Luttrell, CAMS-Audit, CFCS, Compliance and Engagement Director, Abrigo Colorado Banker 8
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