10 Effective Solutions for Fraud Prevention in 2025

Financial institutions have never been more connected, yet more vulnerable. As systems evolve to handle faster payments and broader access, fraud is evolving alongside them.

In 2024, the Federal Trade Commission reported that consumer losses to fraud reached a staggering $12.5 billion, marking a substantial increase from previous years.

What's needed are fraud prevention solutions built to act fast, adapt quickly, and prevent fraud before it happens, all without disrupting the customer experience.

This article explores how fraud is evolving, highlights the most effective prevention solutions in 2025, and outlines how financial institutions can stay ahead of emerging threats.

What are fraud prevention solutions?

Fraud prevention solutions are systems and strategies that help financial institutions detect, stop, and reduce fraud before it causes damage.

These solutions work in real time, analyzing transactions, customer behavior, and patterns to flag suspicious activity as it happens.

Key features of effective fraud prevention solutions include:

• Spot threats early: Effective solutions monitor transactions, account activity, and user behavior around the clock. They catch irregularities before they escalate into costly fraud.
• Adapt fast: Advanced systems learn from every new attempt, refining their response over time. This approach keeps defenses sharp as fraud tactics evolve.
• Fit in seamlessly: Strong fraud prevention tools integrate directly with core banking, mobile, ATM, and teller systems, ensuring consistent protection across every customer touchpoint.

The rising threats shaping fraud in 2025

Fraud in 2025 is more complex than stolen cards or fake checks. Here's what today's banks are up against:

1. First-party fraud

First-party fraud happens when people use their real identities to lie, such as faking income to get credit they plan to default on. It's hard to catch because the fraudster is also the account holder.

In 2024, first-party fraud cost U.S. financial institutions and vendors over $100 billion annually.

During the 2024 holiday season, 13% of Americans and 40% of Gen Z admitted to committing first-party fraud, including disputing legitimate charges or falsely claiming lost items.

2. Synthetic identity fraud

Synthetic identity fraud happens when fraudsters mix real and fake details to create false identities, open accounts, build credit, and disappear after maxing out credit lines.

This type of fraud has emerged as the fastest-growing form of financial crime, surpassing traditional credit card fraud and identity theft. In the U.S., the number of accounts opened with synthetic identities grew 18% in 2024 compared to the previous year.

3. Account takeover (ATO)

Account takeover fraud involves unauthorized access to legitimate customer accounts, often through phishing, credential stuffing, or social engineering.

Once inside, fraudsters can drain funds, make fraudulent transactions, or change account details to cover their tracks.

In 2024, 68% of organizations say cloud account takeovers present a significant security risk.

4. Check and deposit fraud

Despite the rise of electronic payments, check fraud remains an extensive issue.

Fraudsters exploit gaps in deposit processing through methods like forged or altered checks and counterfeit payees. The shift to remote deposit capture has introduced new vulnerabilities, as banks process checks without physical inspection.

Checks are the payment method most often subjected to fraud, with 63% of organizations reporting check fraud activity in 2024.

5. Digital channel vulnerabilities

Fraudsters target mobile apps, online portals, and APIs as financial services go digital. Weak security around logins, sessions, and transactions allows them to do so.

Mobile applications have shown vulnerabilities. A study revealed that 75% of mobile apps contain at least one security flaw, making them susceptible to breaches.

Digital wallets and contactless payments are not exempt from these threats. In 2024, consumers reported losing $347 million to scams involving digital wallet payment apps.

10 smart fraud prevention solutions to strengthen your defenses

Here's a look at 10 fraud prevention solutions helping banks stay ahead of threats in 2025:

1. Enable real-time risk scoring and anomaly detection at deposit points

In 2025, nearly 70% of bank fraud losses originate from undetected activity during transactions or deposits.

Real-time risk scoring addresses this by assigning a fraud probability score to every action, whether a teller-assisted check deposit or an ATM submission.

How it works:

AI models analyze key details like amount, account age, and behavior to generate a risk score. High scores trigger holds, alerts, or escalations.

Actionable strategies:

• Set custom thresholds based on your institution's risk tolerance.
• Route mid-risk items to back-office teams for secondary review within 15 minutes.
• Pair deposit channel metadata (e.g., IP or ATM location) with transaction history.

Pro tip:

VALID Systems' Real-Time Loss Alerts (RTLA)© delivers pre-clearance fraud scoring and alerting across teller lines and ATMs, identifying over 75% of loss-bound check items before they post.

2. Apply behavioral profiling for check issuers and receivers

While most behavioral fraud detection focuses on digital channels, in 2025, banks are also turning to behavior-based profiles for check writers and receivers.

How it works:

Each account develops a behavioral baseline, such as typical check issuances, recipient frequency, and geographic zones.

Actionable strategies:

• Build "normal range" profiles for recurring business and consumer accounts.
• Flag anomalies like new payees, after-hours check scans, or oversized amounts.
• Use machine learning to re-baseline every 90 days to account for seasonal trends.

Pro Tip:

VALID's INclearing Loss Alerts catch altered or out-of-pattern checks during clearing, not just at the point of deposit, protecting against changes made after image capture.

3. Automate exception triage using machine learning in Positive Pay systems

Traditional Positive Pay is rule-based: match the issue file to the presented check, and alert if it is mismatched. But machine learning now adds context, distinguishing between typos and actual tampering.

How it works:

ML models review previous exceptions, outcomes, and user behavior. They learn which types of mismatches are most likely fraud (e.g., check stock mismatch + payee change) and prioritize them.

Actionable strategies:

• Replace rule-only exception handling with adaptive scoring.
• Reduce "exception fatigue" by filtering benign errors to auto-resolve queues.
• Retrain the model quarterly with real case outcomes.

Pro Tip:

VALID's InteliFUNDS© improves Positive Pay by using fraud pattern recognition to differentiate human error from real risk, while guaranteeing covered losses on high-risk exceptions it clears.

4. Check image forensics for alteration detection

According to the U.S. Postal Inspection Service, altered check fraud spiked 385% from 2021 to 2024. Fraudsters chemically wash or digitally edit legitimate checks. Modern forensic image scanning can spot even subtle tampering.

How it works:

AI models examine pixelation, spacing, font mismatches, ink density, and even pen stroke dynamics to detect edits invisible to the human eye.

Actionable strategies:

• Integrate forensic image analysis into mobile deposit and back-office review tools.
• Flag checks with signature displacement, altered numerals, or reprinted payees.
• Train teams on visual red flags while letting AI handle scale and speed.

5. Leverage cross-institution fraud intelligence with consortium data

Fraud rarely hits just one institution. In 2025, consortium fraud intelligence has become a standard weapon, sharing anonymized data on suspect accounts, check series, or origin banks.

How it works:

Your fraud system ingests alerts and high-risk patterns from other banks and fintechs in the network. Real-time matching previously flagged suspects the moment they appear.

Actionable strategies:

• Join a national or regional fraud data consortium.
• Automatically flag deposits or logins that match blacklisted behavior from other members.
• Assign a higher risk to items linked to previously closed or compromised accounts.

Pro tip:

VALID Edge™ gives your bank access to a shared intelligence platform containing over 300 million account records. It detects duplicate, rerouted, or kited checks linked to previous fraud events.

6. Apply fraud-responsive funds availability rules

Legacy systems rely on fixed hold times. Leading banks use dynamic fraud scoring to decide how long to hold funds or when to make them available.

How it works:

Each deposited check gets a fraud risk score. The system assigns instant availability, partial or complete hold based on thresholds, without manual override.

Actionable strategies:

• Build tiered hold rules for risk levels (e.g., <30 risk = instant release).
• Offer customers optional early access with risk-based fees.
• Use post-deposit risk updates (e.g., stop pay filed) to freeze funds.

Pro Tip:

InteliFUNDS© analyzes each check and determines how quickly to release the funds, reducing unnecessary holds and protecting your institution from risky deposits.

7. Detect early first-party fraud behavior

First-party fraud, like intentional overdrafts, deposit kiting, or check fraud by legitimate customers, is among the fastest-growing fraud categories.

How it works:

AI monitors deposit timing, refund behavior, and overdraft cycles, and it checks usage to spot signs of deception before traditional systems flag them as fraud.

Actionable strategies:

• Review account activity monthly for signs like missed payments, irregular deposits, or repeated stop payments.
• Watch for "soft churn" behavior - customers who drain their accounts right before closing them.
• Track how funds are used, not just what gets deposited.

8. Leverage adaptive session security on digital channels

As fraud migrates to mobile, banks face threats in transactions and how sessions begin and end. In 2025, session hijacking and mobile banking credential theft will be among the top digital risks.

How it works:

The system continuously scores session behavior, such as timing, location, IP address, and device model. When it detects increased risk during a session, it downgrades access or prompts the user to re-authenticate.

Actionable strategies:

• Implement "step-up authentication" for risk spikes during check deposits.
• Auto-log off sessions with signs of bot-like activity or proxy usage.
• Tie mobile check deposit limits to real-time session risk.

9. Apply dual-channel verification for high-risk checks

Use dual-channel verification to confirm high-risk check activity by contacting the account holder through a second method, such as a secure message or app prompt.

How it works:

The system flags a check as high-risk and prompts the customer for additional input, such as confirming the payee or amount. No action = no clearing.

Actionable strategies:

• Set risk thresholds for triggering extra verification on checks.
• Automate SMS/email prompts for the customer to confirm suspicious items.
• Track non-responses as a risk factor.

10. Use teller and ATM intervention prompts

Frontline workers are your last line of defense, but only if they have the proper guidance. Fraud detection prompts built into teller software or ATM systems help staff step in where automation can't.

How it works:

As a check is deposited, live fraud scores prompt messages like "Check flagged: verify ID" or "Check risk level high: Refer to supervisor."

Actionable strategies:

• Display real-time risk feedback at the moment of deposit.
• Train tellers to recognize risk prompts and follow structured intervention steps.
• Use ATM messaging to deny risky deposits with clear error messaging.

Pro Tip:

VALID's RTLA© integrates directly with teller and ATM platforms to deliver actionable alerts before a check is accepted, minimizing fraud at the edge of your network.

How VALID Systems helps financial institutions detect and prevent fraud

Fraud is growing more sophisticated, but the right prevention solutions help your bank stay ahead by protecting operations and keeping things running smoothly.

That's where VALID Systems leads.

Major institutions like PNC, TD Bank, and Truist trust VALID, backed by over two decades of experience and deep expertise in check fraud risk.

Today, VALID supports over $4 trillion in check volume annually, helping banks prevent losses without slowing down their operations.

Here's what sets VALID's fraud prevention solutions apart:

• Operational compatibility: We integrate directly with teller systems, ATMs, mobile apps, and back-office platforms to reduce fraud while running your operations smoothly.
• Configurable fraud logic: You define the fraud thresholds, scoring logic, and response actions to align with your institution's risk strategy.
• Built-in charge-off protection: We provide guaranteed funds availability on approved items, so you can speed up deposits without taking on unnecessary risk.
• Deep industry insight: We build our solutions on decades of hands-on experience and up-to-date fraud trends across the banking industry.

Do you want stronger fraud protection without slowing operations?

Contact VALID Systems today and see how our fraud prevention solutions can strengthen your defenses across every channel.