Understanding the drivers of financial scams and frauds can help public authorities design effective policies and regulations to protect consumers. This chapter discusses drivers of financial scams and frauds that stem from the operating environment, drivers that stem from the behaviours or characteristics of consumers, and how weak controls and systems of financial services providers and other stakeholders may expose consumers to financial scams and frauds.
Protecting Consumers from Financial Scams and Frauds
Abstract
In recent years, the incidence and severity of financial scams and frauds have increased in many places across the globe. Some 70% of respondents with available data available noted that the reported incidence of financial scams and frauds increased in their jurisdiction from 2023 to 2024. Furthermore, 74% of respondents with data available noted that the financial losses from financial scams and frauds also increased from 2023 to 2024. Across the 36 respondents with data on total monetary losses from financial scams and frauds in 2024, total monetary losses in 2024 per jurisdiction ranged from approximately USD 90 000 to more than USD 2 billion; the mean total monetary loss was approximately USD 270 million, and the median total monetary loss was USD 55 million.
This trend has continued into 2025-2026. According to the OECD’s Consumer Finance Risk Monitor 2026 (OECD, 2026[1]), financial scams and frauds were the top risk facing financial consumers stemming from the operating environment in 2025, and this risk was expected to increase in significance in 2026. As shown in Figure 2.1, the incidence of financial scams and frauds increased in 69% of jurisdictions that participated in the Consumer Finance Risk Monitor 2026, at the time of reporting in 2025 compared to the same period in 2024.
Note: N=32 responding jurisdictions for 2024 to 2025, and N=29 responding jurisdictions for 2021 to 2022.
Source: OECD Consumer Finance Risk Monitor (2026)
The increased incidence and severity of financial scams and frauds in many jurisdictions over the past few years, as well as the magnitude of monetary losses to consumers, underscore the severity of the issue and its impact on consumer finances.
Furthermore, as reported in the Consumer Finance Risk Monitor 2026, the three most significant types of financial scams and frauds in 2025 by the number of people affected were: phishing, vishing or smishing for personal information; fraudsters posing as banks, financial advisers, or other financial services providers; and fake schemes designed to tempt consumers to transfer, pay or invest money, or purchase fake insurance. Table 2.1 shows the most significant types of financial scams and frauds, by the number of people affected and by the amount of financial losses.
Notes: N=54 responding jurisdictions for most significant type of financial scams and frauds by people affected. N= 47 responding jurisdictions for most significant type of financial scams and frauds by financial losses.
1. Scammers obtain personal information, such as user IDs, passwords, Personal Identification Numbers (PINs), and other sensitive data by impersonating an authorised person or organisation through email or other electronic media. This causes the victim’s personal data (including sensitive data) to be used without their knowledge, including getting access to their accounts (account takeover). Depending on the form, this is referred to as Phishing (internet), Smishing (SMS), or Vishing (Phone).
Source: Consumer Finance Risk Monitor 2026.
To design effective policies and regulations to protect consumers, it is important for policymakers and public authorities to understand the drivers of the increased incidence and severity of financial scams and frauds. Drivers of financial scams and frauds fall into three broad categories: drivers stemming from the operating environment, drivers stemming from the demand-side, i.e. behaviours or characteristics of consumers, and how weak controls and systems of financial services providers and other stakeholders can expose consumers to financial scams and frauds. The Questionnaire asked respondents to describe the single most significant driver of financial scams and frauds, in their own words, and asked a series of questions within each of the three broad categories.
Beginning with the open-ended question on the most significant driver, responses were divided among four themes. The four themes, listed in order of how many times they were cited by respondents, are:
the pace of digitalisation as evidenced by the widespread adoption of mobile devices, social media and online platforms by financial consumers,
low digital financial literacy and/or digital capabilities of financial consumers,
increased sophistication of financial scams and frauds,
and inadequate systems to detect financial scams and frauds.
In many jurisdictions, the pace of digitalisation, as evidenced by the widespread adoption of mobile devices, social media platforms and/or digital finance by consumers and financial services providers is the most significant driver of financial scams and frauds. For example:
As explained by the National Financial Regulatory Administration (NFRA) in People’s Republic of China (China), the spread of internet access enables fraudsters to quickly establish fraudulent sites or platforms and to lure potential victims with promises of high returns.
In the United Kingdom, 72% of Authorised Push Payment fraud in the first half of 2024 originated online, through social media and search engines (UK Finance, 2024[6]).
The Comisión Nacional del Mercado de Valores (National Securities Market Commission, CNMV) of Spain explained how the proliferation of aggressive and misleading financial promotions on social media platforms, often carried out by unauthorised individuals or entities, can effectively exploit behavioural biases and target large numbers of retail investors and consumers.
Other respondents point to low levels of digital financial literacy and/or digital capabilities of consumers as the most significant driver of scams and frauds. For example:
According to the National Bank of the Republic of North Macedonia, the adoption of digital financial services has outpaced many consumers’ preparedness to use them securely. Consumers are vulnerable not just to traditional scams but also to emerging threats such as fake crypto investments and social engineering attacks.
The National Bank of Georgia explained how consumers with low levels of digital capabilities might unknowingly share sensitive information with others without fully understanding the risks of such behaviour.
The Central Bank of the United Arab Emirates mentioned that most fraud cases in the United Arab Emirates are driven by consumers sharing SMS one-time passcodes, compromising the security of their accounts and/or transactions.
Other respondents see the increased sophistication of scams and frauds as the most significant driver. For example:
As noted by the National Bank of Moldova, consumers may think they are knowledgeable enough to avoid becoming a victim, but scamming methods are increasingly convincing and complex, putting all consumers at risk.
The Commission de Surveillance du Secteur Financier (CSSF) of Luxembourg added that fraudsters and scammers can convincingly mimic real companies.
The Financial Markets Authority (FMA) of New Zealand shared that fraudsters and scammers increasingly appear legitimate by leveraging real/spoofed phone numbers, English call centres and fake reviews. As financial scams and frauds become more sophisticated, it becomes much harder for consumers to spot a fraud or scam.
Lastly, other respondents saw inadequate systems to detect financial scams and frauds as the most significant driver. In their response, the National Bank of Romania described how the lack of real-time monitoring systems by all payment service providers in their jurisdiction makes it hard to identify fraudulent transactions, especially instant payments. They further explained how this is further complicated by the lack of a legal framework to permit beneficiary banks to block fraudulent funds, the lack of a centralised national monitoring system, and the lack of information sharing among payment service providers, among other things. The Capital Markets Board of Türkiye echoed this sentiment, adding that current systems are often unable to successfully monitor and flag every unauthorised transaction.
These drivers can be seen as mutually reinforcing. For instance, the widespread adoption of mobile devices, social media and online platforms – both by consumers and by financial services providers – reinforces the digitalisation of financial services. As the pace of digitalisation increases, social media and online platforms become ripe targets for fraudsters; many respondents noted the aggressive advertising campaigns that are often carried out by fraudsters on social media and online platforms. At the same time, consumers may not have adequate levels of digital financial literacy or digital capabilities that allow them to safely navigate and interact with digital platforms and digital financial services, a problem that becomes more evident as financial scams and frauds become increasingly sophisticated. Lastly, the pace of innovation and the sheer volume of online transactions make it challenging for financial services providers to develop and maintain effective systems to monitor transactions and detect fraudulent behaviour.
The Questionnaire asked respondents to select the five most significant drivers of financial scams and frauds from each of the three broad categories, i.e. the operating environment, demand-side factors, and (weak or inadequate) controls and systems of financial services providers and other stakeholders.
The first category of drivers of financial scams and frauds are those stemming from the operating environment, or the broader economic context. As shown in Figure 2.2, the increasing sophistication of scamming techniques, the proliferation and influence of social media platforms, and the provision of financial services through digital platforms are seen by respondents as the three most significant drivers of financial scams and frauds stemming from the operating environment.
Note: Respondents were asked to select the five most significant drivers of financial scams and frauds stemming from the operating environment.
Source: OECD Questionnaire on Protecting Consumers from Financial Scams and Frauds (2025)
Many respondents shared concerns about the increasing sophistication and complexity of financial scams and frauds, noting that it is an ever-evolving modus operandi. Respondents mentioned how scammers continue to adapt their methods, incorporating social engineering, phishing and spoofing techniques that can mimic legitimate institutions with high accuracy. In Australia, for instance, investment scams were the highest source of reported losses for Australian consumers in 2025; many of these scams use online methods, such as creating sophisticated websites and advertising to trick Australians into believing they are making genuine investments (Australian Competition and Consumer Commission, 2026[7]). Furthermore, scamming techniques that leverage artificial intelligence (AI) can often bypass basic security measures and exploit human behaviour. As a result, scamming techniques become more sophisticated, and detecting and preventing fraudulent behaviour becomes increasingly difficult for financial consumers and financial services providers alike.
The proliferation and influence of social media platforms, amplified by increased access to mobile devices, also drive exposure to fraudulent behaviour. Respondents highlighted concerns about the explosive growth of social media platforms and the algorithmic amplification of “finfluencer” and paid-advertising content, which in some cases allow fraudsters to spread deceptive financial promotions to targeted audiences at viral speed and at relatively low cost and effort. Respondents noted that social media is also a powerful channel for fraudsters to impersonate trusted individuals or financial services providers.
Furthermore, social media and online platforms are often outside the regulatory reach of financial authorities; online content can therefore disseminate fraudulent financial advice in ways that bypass conventional consumer and financial protections. In response, public authorities have taken action through new legislation, guidelines, notices and requests for information (see Box 2.1).
In Colombia, the Superintendencia de Industria y Comercio (Superintendency of Industry and Commerce, SIC) issued “Guidelines on Good Practices for Influencer Advertising” in 2020, which provided recommendations to ensure transparency and compliance with consumer protection standards.
In September 2025, the European Commission sent a request for information under the Digital Services Act (EU Regulation 2022/2065) to Big Tech companies for information on the actions they are taking to prevent online financial scam content on their platforms (European Commission, 2025[8]).
In Italy, a recent warning notice by CONSOB has drawn attention to potential risks arising from the activities of online finfluencers and to the rules to which the dissemination of online financial content is subject. The securities regulator has also ordered the blackout of clone sites spreading deepfake videos of senior public officials, both to stop such scams and to alert citizens to the risks of AI-generated impersonation.
In the United Kingdom, the 2023 Online Safety Act introduced new legal duties for online platforms to assess and mitigate the risk of fraudulent content, including scam ads and impersonation attempts (The Government of the United Kingdom of Great Britain and Northern Ireland, 2023[9]). Ofcom, the UK’s communications regulator, is responsible for enforcing these provisions and issued codes of practice to guide compliance (Ofcom, 2024[10]).
The provision of financial services through digital platforms is seen by respondents as the third most significant driver of financial scams and frauds stemming from the operating environment. The response to the COVID-19 pandemic accelerated a shift towards digital provision of financial services (OECD, 2021[11]), where financial services providers and commercial banks are increasingly using new technology to migrate more business online to lower operating costs and respond to consumer expectations (see Figure 2.3). While digitalisation can be considered a driver stemming from the operating environment, financial services providers play an active role in shaping its evolution. Choices around product design, frictionless payments and transaction speed reflect business incentives that may inadvertently heighten consumer vulnerability to falling victim to financial scams and frauds. Many respondents note that while the rapid growth of digital financial services has made it easier for consumers to open accounts and conduct transactions, the increased adoption of mobile wallets, retail apps and peer-to-peer (P2P) payment applications also creates new avenues for fraudsters to exploit.
Average annual number of mobile and internet banking transactions per adult
Source: Authors’ calculations based on International Monetary Fund Financial Access Survey (FAS), https://data.imf.org/en/datasets/IMF.STA:FAS.
Furthermore, growth in digital platforms heightens fraud risks as fraudsters work to exploit the lack of effective or robust security controls in digital platforms and put pressure on the internal systems of financial services providers. For example, the Superintendencia de Banca, Seguros y AFP (Superintendency of Banking, Insurance and Private Pension Funds, SBS) in Peru indicated that financial services providers are still progressing in the implementation of enhanced cybersecurity standards in line with regulatory timelines. These efforts aim to further strengthen resilience against cybersecurity threats arising from the increasing use of digital platforms, including denial-of-service attacks, data breaches, phishing schemes, malware, ransomware and other technology disruptions. Respondents highlighted the challenge faced by financial services providers in maintaining an appropriate balance between mitigating transaction risks and ensuring a positive customer experience (Siegel Bernard and Lieber, 2023[12]).
According to respondents, consumers’ access to mobile devices also drives an increased incidence of financial scams and frauds. Indeed, the widespread adoption of mobile devices offers opportunities for consumers and enables access to e-commerce, digital banking and social media platforms, yet it also heightens consumers’ exposure to fraud through applications, messaging platforms and mobile browsers. Respondents acknowledged that mobile devices give consumers constant, easy access to social media and online platforms where they are frequently exposed to scam content, misleading advertisements and non-legitimate financial advice. In Ireland, for instance, An Garda Síochána (Ireland’s National Police Service) statistics for May 2025 reveal that shopping and online auction fraud, where fake websites are used to steal payment card details, increased by 200% in the first three months of 2025 compared to the same period in 2024 (An Garda Síochána, 2025[13]). Furthermore, fraudsters and scammers can use SMS messaging to contact potential victims. Similar to social media platforms, however, telecommunications providers are outside the regulatory reach of financial authorities.
The second category of drivers of financial scams and frauds are demand-side drivers, which originate from the characteristics and circumstances of financial consumers themselves. Figure 2.4 shows the most significant demand-side drivers, including inadequate digital financial literacy or digital capabilities, the increased use of social media platforms by consumers, as well as the lack of due diligence of financial consumers when interacting with financial products and services.
Note: Respondents were asked to select the five most significant demand-side drivers of financial scams and frauds.
Source: OECD Questionnaire on Protecting Consumers from Financial Scams and Frauds (2025)
Most respondents are concerned that consumers in their jurisdictions often lack the necessary skills to understand digital financial products, identify secure platforms or recognise suspicious online behaviour. Lower levels of digital financial literacy or digital capabilities leave financial consumers vulnerable to phishing, identity theft and fraudulent investment schemes, especially in rapidly evolving digital environments. Low levels of digital literacy or digital capabilities can manifest in multiple ways, including the inability of users to identify fraudulent schemes, the lack of understanding of security features and elements used to authenticate applications, websites, or transactions, and even the failure to correctly use security measures implemented by service providers (such as push notifications or multi-factor authentication). Many respondents stressed how the rapid growth of digital finance highlights a need to continuously strengthen consumers’ digital capabilities to safely engage with the financial system.
Evidence from the OECD/INFE International Survey of Adult Financial Literacy 2023 suggests that many adults who have fallen victim to a financial scam or fraud do not have high levels of financial literacy (OECD, 2023[14]). On average, 15% of adults (14% of adults in participating OECD countries) reported that they have been victims of either a phishing scam, an investment scam, a scam involving the provision of personal information or an unauthorised transaction. As shown in Figure 2.5, many of these victims do not score the target minimum financial literacy score (70 out of 100 points).
Financial literacy levels among adults who have been a victim of a financial scam or fraud
Note: Having been a victim of a scam or fraud was constructed based on responses from having been scammed into providing personal information, having an unauthorised transaction, having experienced a phishing scam, and having experienced an investment scam. The data reported in the figure only capture whether a person has been victim of one of these types of financial frauds and scams at least once.
The minimum target score of financial literacy is defined as scoring at least 70 out of 100 points.
Source: OECD/INFE Survey of Adult Financial Literacy 2023
Echoing the earlier findings about the proliferation of mobile devices and social media platforms, consumers’ use of social media can expose them to scammers and fraudulent content. Many respondents noted that consumers are often unaware that social media platforms do not vet financial advice or endorsements, and thus many consumers are more willing to trust viral or popular content on these platforms. Consumers may also provide personal data on these platforms, making them targets for fraudsters and scammers who can use the information to gain access to accounts. This too highlights how consumers’ levels of digital capabilities and digital financial literacy can interact with their use of social media to make them more vulnerable to financial scams and frauds.
A lack of due diligence on the part of consumers is also cited as a significant demand-side driver of financial scams and frauds. Respondents noted that victims of financial scams and frauds often skipped basic due diligence checks, such as verifying whether the website, advertisement, provider or financial adviser is authorised and legitimate. As the financial sector becomes increasingly digitalised, many individuals may conduct financial transactions or adopt new digital platforms without verifying their legitimacy, reading user agreements or assessing risks. The lack of due diligence can be driven by consumers’ desire for convenience, a sense of urgency or overconfidence in their own capabilities to avoid financial scams and frauds.
For other consumers, a lack of due diligence is related to lower levels of digital capabilities and/or digital financial literacy as they may not always know how to distinguish between legitimate versus fraudulent sites, or between legitimate providers and scammers. Some respondents, however, acknowledged that the ability to distinguish between legitimate and fraudulent products and services was becoming increasingly more difficult, especially for scams that use AI-generated content to impersonate known figures.
Another demand-side driver of financial scams and frauds is the behavioural biases of consumers; such biases can be exploited by fraudsters and scammers. Box 2.2 discusses various behavioural elements of fraud victimisation.
This Box reviews recent peer‑reviewed academic literature on who falls victim to financial scams and frauds, focusing on socio-demographic characteristics and the circumstances and behavioural elements of consumers. Over the past decade, research has shifted away from identifying a single “typical victim” toward a more nuanced understanding of how circumstances and behavioural elements interact to shape consumers’ vulnerability to becoming a victim of a financial scam or fraud.
There is no single ‘typical’ victim.
A central finding across this empirical literature is that there is no consistent or universal profile of a victim of a financial scam or fraud. For example, Hanoch and Wood (2021) note that research findings regarding demographic variables are often inconsistent, and they conclude that the risk of becoming a victim to a financial scam or fraud instead depends on the interaction between a consumer’s individual characteristics, circumstances and the specific design of the financial scam or fraud (Hanoch and Wood, 2021[15]). Another study by Koning et al. (2024) uses a nationally representative Dutch dataset and found that very few socio-demographic or personality variables, apart from low self-control, having an immigrant background, and frequent internet use, were associated with a higher likelihood of becoming a victim to a financial scam or fraud (Koning, Junger and Veldkamp, 2024[16]).
Older adults are not always the primary victims of financial scams and frauds.
While typical narratives portray older adults as the primary victims of financial scams and frauds, recent research offers a more complex picture. On one hand, several studies do find that older adults may face heightened risk of becoming a victim, for example:
Older adults in the European Union are more likely to experience fraud overall, though not necessarily online fraud (Kemp and Pérez, 2023[17]).
Longitudinal evidence from the United States shows that older adults aged 70 to 80 years old are more likely to experience repeat victimisation and exposure to multiple scam types compared to middle-aged adults (DeLiema et al., 2024[18]).
On the other hand, other research challenges the narrative that older adults are disproportionately victims of financial scams and frauds.
For instance, Shang et al. (2022) report no consistent evidence that older adults are more frequently targeted or deceived in online environments, suggesting that age effects are highly context-dependent (Shang et al., 2022[19]).
Age, however, is an important consideration for policymakers, because the consequences of becoming a victim could be more severe for older adults compared to younger adults. For instance, losing one’s life savings due to a financial scam or fraud would have much more consequential impacts on older adults, who are retired and out of the labour force, compared to younger adults who have the remainder of their working lives to (in theory) earn back lost savings.
Findings are mixed when considering the income level of victims.
The relationship between income and victimisation, like that of age and victimisation, is also complex. Some studies find that higher-income individuals or communities experience higher victimisation rates, possibly because they are more attractive targets for financial fraudsters or scammers. In contrast, other research highlights financial fragility, such as low savings or economic insecurity, is a key risk factor, particularly for repeated victimisation. These seemingly contradictory findings could be because depending on the type of financial scam or fraud, individuals with high income or wealth become attractive targets, or individuals under financial strain may be more susceptible to promises of easy money, or ‘get rich quick’ schemes.
Certain circumstances and behaviours, rather than purely socio-demographic characteristics, may put individuals at higher risk to falling victim to a financial scam or fraud.
Recent studies reveal how certain circumstances and behaviours, rather than socio-demographic characteristics, may have a greater influence on victimisation (Gottfried, Park and Anderson, 2025[20]) (Dadà et al., 2025[21]) (Honick et al., 2021[22]) (FINRA Investor Education Foundation, 2021[23]) (Mani et al., 2013[24]).
Exposure: Recent literature emphasises the importance of exposure to fraudulent opportunities, fraudulent content, and/or fraudsters and scammers. For instance, frequent internet use and digital engagement increase exposure to fraud attempts, particularly in online environments. In addition, behaviours that increase interactions with potential fraudsters and scammers, such as responding to unsolicited communications, entering sweepstakes, or engaging with unknown contacts, are associated with higher victimisation rates.
Lack of awareness: Many financial consumers remain unaware of more sophisticated fraud or scam techniques. Consumers inadvertently increase their chances of falling victim to financial scams and frauds if they remain uninformed.
Lack of vigilance: Busy lifestyles and constant distractions contribute to a lack of vigilance, causing individuals to overlook warning signs or suspicious behaviours. Being under time pressure (whether real or manufactured by the fraudster), neglecting to conduct proper research, failing to verify the authenticity of communications or offers, and inadequate protection of personal information can leave individuals vulnerable to financial scams and frauds.
Manipulation or exploitation of emotions: Fraudsters and scammers frequently exploit emotions to manipulate their targets by creating a false sense of urgency, fear, or excitement. This hampers rational thinking and compels victims to make impulsive decisions and fail to evaluate the situation more objectively. When fraudsters and scammers pose as government officials, company representatives, or law enforcement officers, they are specifically exploiting victims’ trust to convince them to share personal information, provide access to financial accounts, or make financial transactions.
Higher levels of education and financial literacy seem to offer protection against victimisation.
In terms of levels of education and financial literacy, higher levels of education can decrease consumers’ risk of becoming a victim by improving financial skills and decision making capacity (Hancock, Czaja and Beach, 2025[25]). Conversely, lower levels of education and financial literacy are associated with greater susceptibility to falling victim to financial scams or frauds. For instance, Beach et al. (2020) demonstrate that lower numeracy, weaker financial knowledge, and difficulties managing finances significantly increase vulnerability to financial scams and frauds (Beach et al., 2020[26]). In addition, lower financial literacy and numeracy skills significantly increase vulnerability by impairing individuals’ ability to evaluate fraudulent offers.
A few respondents shared concerns that consumers in vulnerable circumstances and consumers with disabilities may be disproportionately at risk of harm from financial scams and frauds, which is a subject addressed in the 2025 OECD policy paper on Understanding and responding to financial consumer vulnerability (OECD, 2025[27]).
In Australia, for instance, consumers from culturally and linguistically diverse communities were significantly over-represented in terms of financial losses across a range of scam types in 2025, including identity theft and threat-based scams (Australian Competition and Consumer Commission, 2026[7]).
A recent study by the Federal Reserve Bank revealed how financially vulnerable consumers were more likely to fall victim to fraud, more likely to lose money to fraudulent schemes and less likely to fully recover lost funds compared to financially resilient consumers (Routh and Lei Toh, 2025[28]).
Other research suggests that consumers who may be vulnerable due to low financial capability, cognitive decline or material hardship were more likely to report experiencing mistreatment when interacting with financial services and to report having their financial accounts compromised (Lim and Letkiewicz, 2023[29]).
In Japan, a study of older adults (ages 60 years or over) found that fraud victims among elderly adults were more likely to be female, live alone, go out infrequently and respond quickly to phone calls and unknown visitors (Ueno et al., 2022[30]).
The third category of drivers of financial scams and frauds arises from weak controls and systems of financial services providers and other stakeholders that can expose consumers to financial scams and frauds. Figure 2.6 presents the ten most frequently selected ways that weak controls and systems of financial services providers and other stakeholders can expose consumers to financial scams and frauds. The three main ways are through inadequate systems to detect or prevent unauthorised transactions or payments, the inability to detect authorised transactions initiated by fraudulent means,1 and a lack of risk awareness campaigns aimed at consumers. In addition, aggressive advertising campaigns by fraudulent entities carried out on social media platforms were indicated by respondents as another prominent way in which the conduct of other stakeholders (i.e. social media platforms) exposes consumers to financial scams and frauds. The lack of collaborative frameworks among financial services providers to foster intelligence-sharing as well as inadequate systems to prevent the impersonation of staff or the use of the company name were also cited as important drivers of financial scams and frauds.
Note: Respondents were asked to select the five most significant drivers of financial scams and frauds stemming from the conduct of financial services providers and other stakeholders.
Source: OECD Questionnaire on Protecting Consumers from Financial Scams and Frauds (2025)
Many respondents indicated that inadequate systems to detect or prevent unauthorised transactions or payments were driving an increase in the incidence and/or severity of financial scams and frauds. For instance, the Comisión Nacional de Bancos y Seguros (National Commission of Banking and Insurance, CNBS) of Honduras stressed the importance of financial services providers’ ability to analyse customers’ transaction profiles, device usage, geographic location and other factors since reliance on multi-factor authentication mechanisms alone is not adequate when such credentials are manipulated, lost or stolen.
Without strong detection mechanisms such as real-time monitoring, fraudulent transactions may go undetected by financial services providers. Many respondents acknowledged that detection algorithms were not always robust. For example, the Dutch Authority for Financial Markets (AFM Netherlands) noted how internal detection systems of new entrants in the financial market, particularly crypto asset platforms, are not always as developed or as adequate as those of traditional players. Additionally, integrating new technologies (e.g. AI, machine learning) to enhance fraud detection can be costly, particularly for smaller institutions with limited budgets or systems.
At the same time, respondents also note that fraudsters can nevertheless often successfully bypass such systems. Fraudsters exploit any existing gaps in financial services providers’ prevention and detection systems, which can result in significant financial losses for both consumers and these institutions. Effective implementation of real-time fraud detection mechanisms therefore requires financial services providers to have the resources and expertise to enhance their ability to identify and block suspicious online banking activities, ensuring they keep pace with evolving fraud and scamming techniques. For example, the Central Bank of the Philippines (Bangko Sentral ng Pilipinas) shared how legacy systems may not be easily adaptable to the sophisticated ways fraudsters can override security protocols, and that even financial services providers with sophisticated systems should continually exercise extraordinary due diligence in protecting their systems from cyberthreats and attacks.
Many respondents also shared how financial services providers and other stakeholders may not have deployed comprehensive and effective risk awareness campaigns; this lack of effective campaigns is seen as another significant conduct driver of financial scams and frauds. While respondents stressed the importance of raising consumer awareness, many also noted how private sector-led campaigns are often limited, sporadic and unevenly distributed across financial services providers. Many respondents urged supervised entities to intensify their efforts to conduct campaigns for their consumers and alert them to current and emerging risks, as well as practical guidance on protective measures consumers should take when conducting financial transactions. Centralised, clear and consistently delivered awareness campaigns could strengthen consumers’ ability to recognise fraud warning signs and know how to verify whether a financial provider or offer is legitimate.
The lack of collaborative frameworks among financial services providers, as well as the conduct of online marketplace platforms and telecommunications providers, also drive financial scams and frauds. Respondents explained how limited data and information sharing – both across the financial sector and between financial services providers and law enforcement – hinders the timely detection and prevention of fraud schemes. For instance, the South African Financial Sector Conduct Authority noted how inadequate interoperability systems across the financial sector limit institutions’ ability to detect fraudulent transactions within 30 minutes of such illegal activities.
The conduct of telecommunications providers, social media and online platforms also affects the incidence and severity of financial scams and frauds, giving rise to recent calls for greater accountability of Big Tech companies for fraudulent content on their platforms, including IOSCO’s Statement on Combatting Online Harm and the Role of Platform Providers (IOSCO, 2025[31]) from May 2025. This illustrates that consumers are not just exposed to financial scams and frauds when interacting with the financial sector.
← 1. The distinction between unauthorised transactions versus authorised transactions initiated by fraudulent means is discussed in detail in Box 4.1.