Fighting Payment Fraud: Key Trends and Strategies for Insurers

Highlights

Checks remain the most vulnerable payment method, with 63% of organizations experiencing check fraud attacks or attempts in 2024, according to the AFP 2025 Payments and Fraud Report.

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In 2024, 269 million card records and 1.9 million stolen U.S. bank checks were posted on dark web and clear web platforms.

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Payment fraud, spanning both traditional and digital channels, continues to be a dynamic and evolving challenge for insurers. The expansion of digital payment ecosystems presents a double-edged sword: while enabling faster and more convenient transactions, it also creates vulnerabilities that fraudsters are quick to exploit. Although consumer preference for digital payment methods has driven a steady decline in check usage, mail-theft-related check fraud has been on the rise. For insurers, payment fraud is more than just a financial burden — it erodes trust, disrupts operations, and diminishes customer satisfaction.

Mail Theft and Check Fraud: A Growing Concern

Over the past 30 years, the Federal Reserve has reported an 82% decline in the number of checks collected annually. Despite this significant reduction in check usage, mail-theft-related check fraud has been on the rise. This trend is particularly troubling because, beyond the financial losses, checks often contain sensitive personal information that can be exploited.¹

“Despite the declining use of checks in the United States, criminals have been increasingly targeting the U.S. Mail since the COVID-19 pandemic to commit check fraud,” the Financial Crimes Enforcement Network (FinCEN) wrote in a 2023 alert.²

According to the AFP 2025 Payments and Fraud Report, checks remain the most frequently targeted payment method for fraud, with 63% of respondents reporting attempted or actual check fraud in 2024. Mail interference also continues to be a major issue, with 23% of organizations attributing check fraud to mailbox theft.³

Check Fraud Practices

The Financial Crimes Enforcement Network (FinCEN) reported in September 2024 that mail-theft related check fraud amounted to more than $688 million between February 2023 and August 2023. FinCEN determined that after checks were stolen from the U.S. mail, 44% were altered and then deposited, 26% were used as templates to create counterfeit checks, and 20% were fraudulently signed and deposited.⁴

More sophisticated check fraud practices include:

Check Washing: Fraudsters use chemicals to erase original ink from checks, allowing them to rewrite the details with fraudulent information.
Selling Stolen Check Information Online: Criminals exploit stolen checks by selling their details on dark web marketplaces or online forums, as highlighted by Bank Secrecy Act (BSA) reports and open-source research.
Counterfeit Check Creation: Stolen checks are used as templates to produce counterfeit versions containing the victim’s banking details. In some cases, advanced technology is employed to create high-quality forgeries.

The Evolving Landscape of Digital Payment Fraud

Fraudulent card transactions are expected to exceed $43.7 billion globally by 2037. Among these, card-not-present (CNP) fraud has experienced significant growth, rising by 35% in 2023.⁵ Beyond these numbers, insurers contend with indirect costs such as operational disruptions and customer attrition, highlighting the critical need for strong fraud prevention strategies.

Leading Payment Fraud Trends to Watch

Here is a closer look at the leading fraud trends to watch in 2025:

AI-Assisted Fraud

Fraudsters are using AI to scale their attacks and develop sophisticated schemes. Tools like ChatGPT have been used maliciously to generate phishing messages, contributing to a 4,151% surge in fraudulent phishing messages between late 2022 and mid-2024. Fraudsters are exploiting the same advanced technologies that businesses use to innovate.⁶

Deepfake Exploitation

Deepfakes, which involve synthetic audio, video, or images created using machine learning, became increasingly frequent in 2024, with a deepfake attempt occurring every five minutes. This poses particular concerns in the insurance industry, where fraudulent claims accompanied by manipulated visuals could undermine operational trust.⁷

Account Takeover

Account takeover (ATO) fraud⁸— where cybercriminals gain unauthorized access to a victim's online bank, payroll, health savings, or social media account — has seen a sharp increase in associated losses. According to Javelin, both account takeover fraud and new account fraud are on the rise. Losses from ATO fraud surged to $15.6 billion in 2024, up from $12.7 billion in 2023, while new-account fraud — where criminals use stolen personal information to open fraudulent accounts — grew to $6.2 billion, compared to $5.3 billion the previous year.⁹ Criminals often exploit compromised credentials through techniques like "credential stuffing," which can lead to more extensive fraud, such as unauthorized payments or fund redirection. Credential stuffing involves using stolen login credentials from one service to attempt unauthorized access to accounts on other platforms.¹⁰

Fraud as a Service

The dark web has created an economy for fraudsters, enabling them to buy stolen data or lease tools specifically designed for executing fraudulent activities. Card testing shops and pre-packaged attack solutions have turned novice criminals into capable perpetrators, amplifying the scale of attacks. In 2024, 269 million card records and 1.9 million stolen U.S. bank checks were posted on dark web and clear web platforms.¹¹

BIN Attacks

In these fraud schemes, criminals, often leveraging AI, attempt to identify valid credit card numbers by starting with a known Bank Identification Number (BIN). This sequence — the first six digits of a payment card — identifies the card issuer and may also include details like card type, tier, and geographic location. According to Mastercard¹², after obtaining or stealing a valid BIN or a newly issued card number range, criminals:

Use random-number generators and algorithms to complete the card number, expiration date, and security code, creating hundreds or even thousands of fake accounts.
Deploy bots to test these combinations, often targeting websites with weak security measures that don’t block access after repeated failed attempts.
Once a valid card number is identified, fraudsters can make unauthorized transactions until the cardholder or issuer detects the activity and freezes the account.

Combatting Payment Fraud with Proactive Strategies

As fraud tactics grow more sophisticated, so do the tools and strategies to counter them. Advanced technologies such as artificial intelligence (AI), machine learning (ML), and risk-based fraud controls are transforming how companies detect, prevent, and respond to these threats.

Risk-Based Authentication (RBA)

Risk-based authentication (RBA) dynamically tailors authentication requirements based on real-time signals. By analyzing behaviors, device attributes, geographic patterns, and other data points, insurers can adjust the level of authentication needed. Low-risk users benefit from seamless, streamlined transactions, while anomalies or high-risk activities prompt additional layers of authentication.

AI and ML

Intelligent fraud defenses powered by AI and ML are revolutionizing how insurers detect, prevent, and combat fraud, all while maintaining an optimal customer experience. These advanced technologies analyze vast datasets, uncover subtle patterns, and adapt to emerging threats. By continuously monitoring transactional data, AI can detect and flag anomalies within seconds. Machine learning further enhances this process by refining detection capabilities — fraud models "learn" from feedback, adapting to new behaviors and improving accuracy over time.

AI also reduces false positives, a persistent issue with traditional fraud controls. By combining supervised and unsupervised ML techniques, fraud models can more accurately distinguish legitimate behaviors from genuinely suspicious activities. This precision helps avoid the common problem of disrupting valid customer transactions, reducing friction, and enhancing the overall customer experience.

The Road Ahead for Payment Fraud Defense

Fraud prevention requires ongoing vigilance and innovation. Security must be embedded into core strategies to ensure risks do not hinder growth. Insurers should prioritize safeguarding credentials and personally identifiable information (PII) to reduce vulnerabilities that cybercriminals could exploit.

Key Takeaways for Insurers to Strengthen Defenses:

Invest in AI and ML to enhance fraud detection accuracy and adaptability.
Implement risk-based authentication to balance robust security with a seamless customer experience.
Proactively monitor and update operational rules and security protocols.
Establish collaborative feedback loops to refine and improve fraud models.
Commit to continuous education on emerging fraud trends to stay ahead of threats.

By adopting intelligent fraud controls and focusing on delivering a frictionless customer experience, insurers can create a future-ready defense against payment fraud. At its core, fraud prevention is more than stopping bad actors — it’s an opportunity to redefine and strengthen the insurer-policyholder relationship. The future of fraud defense lies in innovation and collaboration.

Keeping Policyholder Data Safe with Strong Risk Management

Data and payment security are critical concerns in an era marked by identity theft, fraud, and various other vulnerabilities. Insurers face immense pressure to safeguard policyholder data while meeting compliance requirements. One Inc takes data protection and cybersecurity seriously. We adhere to industry-leading security requirements that reduce your risk of exposure, streamline network security and compliance practices, and help to protect your policyholders from data theft. As a Nacha Certified Third-Party Sender, we have met rigorous standards for risk management and compliance, underscoring the strength of our corporate controls.

One Inc has developed a proprietary, rules-based system for detecting unusual transaction activity. Utilizing sophisticated technology and historical data, One Inc can identify suspicious activities related to sales, authorization declines, activity volume, country of origin, BIN concentration, BIN testing, and more. Our skilled Risk Management team is alerted to suspicious activities to investigate and determine their severity, promptly taking preventative measures and working collaboratively with clients to mitigate exposure.

Learn more.

Stay Ahead of Cyber Threats, Protect Your Business

Join Mastercard's Security Solutions expert Nicole Yap and One Inc CIO Elizabeth Erckmann Hoemeke for the webinar "Fighting Payment Fraud: Securing Systems, Building Trust". Discover actionable strategies to secure payments, leverage AI, and strengthen customer trust.

When: Wednesday, July 23, 2025, at 12 PM EST