Scams Are Driving a Wedge Between Banks and Customers
By Al Pascual CEO and Co-Founder of Scamnetic
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Banks have invested in fighting identity theft and fraud for decades. However, until about four years ago, banks didn’t worry much about scams. But by 2022, criminals got really organized and began scamming consumers at scale. Scam losses have since grown precipitously, demonstrating that banks have yet to stop them.
One of the most prevalent and impactful financial crimes, investment scams doubled in 2022, when U.S. consumers lost an estimated $3.8 billion. Consumers again reported losing more money to investment scams than any other category in 2024. This time, hitting $5.7 billion, a 24% increase over 2023, and overall losses for U.S. customers grew to $12.4 billion, according to the Federal Trade Commission (FTC). Even the FTC itself is warning of imposter scams involving the commission, the very body whose mission is to protect the public from deceptive practices.
Why this matters: Scams erode trust in financial institutions and have created an enormous gulf between customers and banks. Customers expect and demand robust safeguards – in fact, and perhaps somewhat surprisingly, 59% of victims indicated fraud detection and monitoring as the most important in 2024. Lasting relationships are built on trust, and banks must continuously reinforce it.
Customers are more likely to stay with a bank that restores all or a portion of their losses. And yet, more than four in 10 customers (42%) who lost funds to banking scams in the last five years consider switching banks, and 19% have already done so, according to the latest PYMNTS Intelligence report.
With losses in the hundreds of billions for customers and financial institutions in the United States alone, and U.S. legislative efforts underway to penalize financial institutions that fail to protect consumers from scams, banks have a clear incentive to invest in scam prevention.
How did we get here, and what can banks do to address the growing scam problem?
Scamming is Now an Industry – and AI is Making Matters Worse
Scam activity in Southeast Asia has exploded in recent years.
Cybercrime compounds and scam farms, which reports indicate are linked to transnational crime networks and may be staffed via human trafficking, now operate in places such as Cambodia, Laos, Myanmar and the Philippines. These operations contribute an estimated 40% to 60% of GDP for countries such as Cambodia. The Chinese government has aggressively cracked down on scams, so scammers have redirected much of their activity to the Western world.
At the same time, SIM farms are on the rise in both Asia and the United States. In September 2025, the U.S. Secret Service uncovered a massive network of SIM farms across New York. Scammers use SIM cards within mobile phones to illegally take over a person’s phone number and gain access to their bank accounts by intercepting one-time security codes sent via text.
Criminals are also becoming more specialized, with whole ecosystems powering scams. Call centers make fraudulent calls. Other groups provide data and scam targets to call centers. Special operations teams often focus on recruiting and managing ‘mules’ to collect and deliver ill-gotten gains up the criminal chain of command.
And now, AI is generating content and conversations used in even more compelling scams.
Education Alone is Not Enough
The way financial institutions address scams versus fraud is very different.
To address fraud, banks have been deploying tools to detect fraudulent transactions and to leverage identity verification and authentication during account opening and throughout the customer journey. These efforts aim to verify whether or not the customer is who they appear to be.
But none of those tools work to entirely weed out scams, since some of the potent scams are customer-authorized. Many banks still rely solely on education to prevent fraudulent scams, and this approach clearly isn’t working.
However, banks have already proven they know how to deploy people, process and technology to keep customers safe. But for now, banks are not legally required to do so in cases of scams.
The Coming Legal and Legislative Pressure
U.S. legislation and other legal efforts requiring financial services firms to address scams are imminent.
The New York attorney general has brought suit against Zelle over alleged security lapses that, the state says, led to $1 billion in consumer losses; against Citibank for purportedly failing to protect and reimburse fraud victims, while calling for Citibank for allegedly failing to prevent scammers from stealing consumers’ funds.
The U.S. Senate Banking, Housing, and Urban Affairs Committee has sought answers from the banks that own Zelle, detailing what they are doing to track and stop social media scams that hurt millions of Americans on peer-to-peer payment platforms. The committee is also introducing legislation to increase financial institutions’ liability for scams. Some of these lawmakers, along with others, are advocating for the Stop the Scammers Act to restore funding to the Consumer Financial Protection Bureau and protect consumers from scams.
All of these initiatives are led by Democrats, making it extremely unlikely they will move forward during the current Republican-led administration. There is one piece of legislation that has garnered bipartisan support: the Guarding Unprotected Aging Retirees from Deception (GUARD) Act, although it, too, is led by Democrats and focuses on protecting seniors.
With scams costing U.S. consumers tens of billions of dollars in losses, the writing is on the wall. Financial institutions need to make significant strides in protecting customers from scams and stay ahead of regulatory changes.
Now is the Time to Intelligently Thwart Scams and Proactively Address Regulations
Today, banks serve up generic education about potential threats as content on websites and in mobile apps. Materials and notifications are often obscure, hard to find, and woefully dated.
Rather than waiting for legislators and regulators to hold them accountable, financial institutions must move swiftly toward predictive prevention. With customers heading for the exits, banks should focus on who is being targeted and how, applying the same people-process-technology methodology they use to address more traditional banking fraud.
Scammers no longer necessarily target specific demographics like they once did. The rise of social media and digital transactions means that everyone, from young digital natives to senior citizens to banks themselves, is a potential target. Scams are now highly personalized and sophisticated, using a variety of platforms to deceive victims.
Bottom line: Financial institutions cannot afford reactive, one-size-fits-all approaches to combating ever-more-sophisticated scams. Bankers must use tailored, just-in-time insights to help customers identify scams before money ever leaves an account – because once it does, it can be incredibly difficult to get back. As importantly, they need to establish regulatory technology (RegTech) compliance teams to monitor U.S. and global regulatory changes and impending new laws while conducting scenario planning to anticipate potential and forthcoming mandates.
Customers are under siege, and their trust is easily lost. Now is the moment for banks to act, for they too are under siege, financially and from increasing customer churn.
