Identity Fraud: How Much Banks Lost in 2024?

In 2023, fraud losses to businesses due to identity theft exceeded $635 billion—are you prepared to protect your organization?

What is Identity Fraud?

Identity fraud is the top priority for fraud prevention among 76% of IT and security decision-makers. This focus is understandable, particularly given that fraud losses due to identity theft surpassed $635 billion in 2023. Additionally, account takeover attacks increased by 354% year-over-year. As cybercriminals continue to evolve their tactics and AI-powered threats make it increasingly difficult to distinguish between fraudsters and legitimate users, organizations must adapt their anti-fraud strategies to safeguard their revenue, reputation, and customers. As technology advances, so do the tactics used by fraudsters. New threats are emerging daily in the digital economy. Mobile banking fraud and authorized push payment scams are on the rise in the banking sector. In these schemes, individuals are deceived into approving payments to fraudulent accounts. E-commerce companies are experiencing an increase in card-not-present fraud and refund abuse. Government organizations are also facing growing benefits fraud and tax identity theft issues. In the iGaming sector, fraudsters engage in bonus abuse and multi-accounting schemes, exploiting promotions and creating multiple accounts for unfair advantages.

Here are 20 different types of identity theft and fraud

Account takeover fraud
Debit card fraud or credit card fraud
Driver’s license identity theft
Mail identity theft
Online shopping fraud
Social Security number identity theft
Senior identity theft and scams
Child identity theft
Tax identity theft
Biometric identity theft
Synthetic identity theft
Medical identity theft
Mortgage fraud
Home title fraud
Passport fraud
Internet of Things identity theft
Friendly fraud
Employment fraud
Unemployment fraud
Crypto fraud

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How Much Do Banks Lose Due to Identity Fraud?

In 2024, the financial impact of identity fraud on banks continues to rise. Global losses from financial fraud, which include identity theft, are expected to surpass $40 billion by the end of the year. This figure includes direct losses, such as stolen funds, and indirect costs, like compensation claims, legal fees, and system improvements to prevent future fraud.

More online transactions: As digital banking becomes more popular, fraudsters will have more opportunities to exploit weaknesses.
Increased sophistication of fraudsters: Criminals use advanced tools like artificial intelligence to bypass security measures.
Data breaches: Hackers are continually finding ways to access large amounts of personal data, which they can use for fraud.

To understand the extent of this issue, let’s look at five examples of identity fraud in 2024 that caused significant financial losses.

Example 1: The Global Data Breach at a Bank

In early 2024, a Bank, a major financial institution, suffered a massive data breach. Hackers accessed the personal and financial information of over 10 million customers. The data included names, addresses, social security numbers, and bank account details. The breach was traced to a bank’s online banking system vulnerability.

The aftermath of the breach was costly for the Bank. Fraudsters quickly used the stolen information to open new credit cards and lines of credit in the names of affected customers. The bank reported that it had lost nearly $500 million due to fraudulent transactions and had to spend an additional $200 million on investigation, customer compensation, and system upgrades to prevent future incidents. The breach also damaged the bank’s reputation, leading to a loss of customer trust and business.

Example 2: Phishing Scams Targeting Bank Customers

In the second quarter of 2024, a series of sophisticated phishing attacks targeted customers of several large banks. These phishing scams tricked people into revealing their banking login credentials by posing as legitimate communications from their bank. Fraudsters sent fake emails or text messages, convincing recipients to click on links that led to fake websites that looked almost identical to their bank’s official site.

Once customers entered their login information, fraudsters used it to steal funds from their accounts or make unauthorized transfers. One major bank reported losing $50 million to these phishing scams. Additionally, the bank faced significant expenses related to investigating the fraud, compensating affected customers, and enhancing its security protocols.

Example 3: Synthetic Identity Fraud Case

Synthetic identity fraud is a growing problem where criminals create fake identities using a combination of real and fabricated information. In 2024, several large banks reported a surge in synthetic identity fraud, where criminals used real names, fake addresses, and stolen Social Security numbers to open accounts and apply for credit cards.

One bank reported losing over $100 million in a single year due to synthetic identity fraud. The criminals used the fake identities to apply for loans and credit cards, and once the accounts were approved, they quickly maxed out the credit before disappearing. The bank’s losses included the stolen funds and the cost of fraud prevention measures that needed to be implemented.

Example 4: The Rise of Deepfake Technology in Fraud

In 2024, a new form of identity fraud that involved deepfake technology emerged. Deepfakes are videos or audio recordings that have been manipulated using artificial intelligence to make someone appear to say or do something they never actually did. Criminals began using deepfakes to impersonate individuals during video calls with bank representatives to authorize fraudulent transactions.

In one notable case, fraudsters used a deepfake video of a company executive to authorize a large transfer of funds from a corporate bank account to a foreign bank account. The bank involved lost $75 million before the fraud was detected. This case raised concerns about using deepfakes in banking and led to the implementation of more stringent video identification and verification protocols.

Example 5: Account Takeover at an International Bank

In late 2024, an international bank reported several account takeover incidents. In these cases, fraudsters accessed customer accounts through various means, including weak passwords, social engineering, and data leaks. Once they accessed the accounts, they made unauthorized transfers, withdrew funds, and took out loans in the customers’ names.

The bank discovered the fraud after multiple customers reported unusual transactions on their accounts. The total loss from these takeovers amounted to $30 million. The bank had to overhaul its authentication systems to address the issue, introducing more rigorous identity verification methods such as two-factor authentication and biometric security measures.

Read: Impact of Fintech on Retail Banking Trends

How Does Ping Identity Safeguard Your Revenue and Reputation?

Customers’ demands are changing. The risk of account takeover, unauthorized access, and fraud is rising. Regulatory requirements are in constant flux. Digital challengers are innovating faster, at lower cost. Growing market share is more challenging than ever. Converged identity and access management (IAM) is key to addressing these challenges and driving sustainable profitability.

Join Ping Identity’s upcoming webinar to tackle the growing threat of identity fraud and learn how to safeguard your revenue and reputation.

Key Takeaways from this webinar

The state of identity fraud today
Typical roadblocks to improving fraud detection and prevention
Common identity fraud tactics and how they translate to fraud losses
How to create a better real-time fraud prevention model
How to spot and stop fraud throughout the user session
Tips to crack down on fraud without sacrificing the user experience

FAQ’s

What is the role of artificial intelligence (AI) in preventing identity fraud?

Banks use artificial intelligence to detect and prevent fraud by analyzing patterns of behavior. AI systems can identify unusual transactions or login attempts and flag them as potentially fraudulent. AI helps banks react faster to prevent large losses.

How do banks protect customers from identity fraud?

Banks use several methods to protect customers from identity fraud, including:

Two-factor authentication (2FA) for online accounts.
Encryption to secure sensitive customer data.
Fraud detection software powered by AI that flags suspicious activities.
Customer education on how to avoid phishing and other scams.

What should I do if my bank account is hacked or I become a victim of identity fraud?

If you suspect you’re a victim of identity fraud, immediately contact your bank to freeze your account and report unauthorized transactions. You should also file a police report, monitor your credit reports, and consider placing a fraud alert with credit agencies. The bank will likely investigate the issue and may offer compensation if you are not at fault.

How can I protect myself from becoming a victim of identity fraud?

Use strong, unique passwords for your online accounts.
Enable two-factor authentication (2FA) whenever possible.
Be cautious of unsolicited emails or phone calls asking for personal information (phishing).
Regularly monitor your bank accounts and credit reports for any suspicious activity.
Avoid using public Wi-Fi for financial transactions.

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