Fighting Fire with Fire: How to Stop Identity and First-Party Fraud, Romance Scams, Elder Fraud, and Beyond

Here's the reality every financial services organization, fintech and brand faces today: Fraudsters are launching AI-powered attacks faster than most systems can adapt.

While organizations debate implementation timelines, criminals are already using AI and machine learning to bypass legacy fraud detection in real-time. Effective fraud prevention today requires organizations to match criminals' technological sophistication.

Put simply, it requires fighting fire with fire.

According to the Javelin 2025 Identity Fraud Study, identity fraud costs rose sharply in 2024, with total losses in the U.S. amounting to slightly more than $27 billion—a staggering 19% increase from $22.8 billion in 2023.

What makes this surge particularly alarming is its breadth: all fraud types tracked by Javelin increased in losses. Account takeover (ATO), an enduring favorite of fraudsters, had the largest increase, from $12.7 billion in 2023 to nearly $16 billion in 2024

Fraudsters are moving faster and at a greater scale, outsmarting old defenses and leaving many organizations scrambling to keep pace.

This guide is for financial institutions, fintechs, and brands ready to elevate their fraud strategy, turning fraud management from a defensive stance into a proactive, customer-centric approach that drives long-term stability, security, and growth.

Fraud today requires more than a "one-size-fits-all" approach; layered, adaptable defenses are essential. The era of static rule-based systems has passed, replaced by dynamic, intelligent solutions that evolve alongside emerging threats.

Stay ahead by deploying AI and machine learning to identify new fraud patterns such as synthetic ID creation, elder abuse schemes, first-party fraud manipulation, and constantly evolving scams that traditional systems miss.

It's also critical to protect the customer experience by minimizing false positives so legitimate customers enjoy fast, secure onboarding and transactions. AI-powered fraud detection is essential to achieve this balance.

Javelin's research shows consumers who have a working knowledge of artificial intelligence are more supportive of their financial institutions using AI to protect their accounts and identities.

This consumer acceptance is critical as banks begin incorporating more AI into their fraud mitigation strategies and identity verification and authentication practices. Financial institutions are among the most trusted entities by consumers, and part of building and maintaining that trust is ensuring consumers understand what their financial provider is doing to protect them.

A strong fraud partner must be able to help you fight back with the same technology and tools that fraudsters are putting to use. This means deploying the latest advances in AI and machine learning to reduce risk, losses, and operational expenses while protecting customers. When improving your fraud outcomes, you need a partner with deep expertise that balances strong fraud protection with seamless customer experience—supporting confidence, compliance, and operational efficiency at scale.

Effective fraud strategies unite people, data orchestration, and automation across every transaction point. Modern fraud management demands a holistic approach that seamlessly connects technology, analytics, and human expertise to create comprehensive protection, including:

Banks and fintechs struggling with fragmented fraud vendor portfolios are pushing toward consolidation to reduce complexity and eliminate costly overlaps. A comprehensive fraud program requires a systematic approach that addresses people, processes, and technology simultaneously. Financial services leaders should start with these seven steps:

The SoFi Tech Solutions Payment Risk Platform: A comprehensive approach

Nothing damages customer relationships faster than blocking legitimate transactions or creating unnecessary friction during critical moments. That's where SoFi Tech Solutions Payment Risk Platform, an AI-powered fraud detection and risk management platform, provides real-time risk intelligence that distinguishes between genuine threats and normal customer behavior, ensuring security without compromising user experience.

Users can achieve the best response for each customer by combining real-time controls (in-authorization monitoring) with thorough post-transaction reviews and channel-wide monitoring. This dual approach catches threats at multiple stages—preventing losses during the transaction itself while learning from patterns that emerge over time. The SoFi Tech Solutions Instant Verification Engine, enhances this capability by providing immediate identity verification of external bank accounts to confirm their existence, status, and associated risk signals during critical moments.

The most effective fraud programs recognize that customization requires more than tweaking existing rules, it also integrates with business operations. Organizations using SoFi Tech Solutions Fraud Operations benefit from continuous risk consultation that adapt their strategy as threats emerge and business needs evolve.

Adaptable Strategies that help organizations move faster and protect the customer experience

Dynamic fraud programs, supported by analytics, adaptable technology, and expert consultation, can transform fraud prevention into a business asset. For financial institutions, fintechs, and brands, a proactive approach reduces risk and cost while driving customer trust, efficiency, and growth.

The evolution from reactive fraud management to proactive, customer-centric strategy represents more than just operational improvement. It creates competitive advantage. Organizations that embrace this transformation position themselves not just to survive the current threat landscape, but to thrive despite its challenges.

By integrating multiple fraud prevention tools—including risk platforms, verification systems, and operational consulting—organizations can shift fraud management from purely defensive spending to strategic business value.