As Generative AI (GenAI) transforms every industry worldwide, organizations grappling with fraud risks are no exception. Last year, the Federal Trade Commission (FTC) reported that consumers lost $12.5 billion to fraud in the US, a 25% increase from the previous year.
Meanwhile, the Federal Bureau of Investigation’s Internet Crime Complaint Center (IC3) issued a stark warning that criminals are exploiting GenAI to scale fraud like never before, using AI-generated text, images and videos, as well as deepfakes and synthetic identities, to deceive systems and victims alike.
In today’s era of GenAI and global access, tackling fraud will require more than reactive tools or traditional rule sets. Countermeasures demand real-time, adaptive intelligence that can evolve as quickly as the threats themselves.
The next wave of fraud prevention strategies will be defined by how quickly teams can harness explainable AI and real-time behavioral intelligence to keep pace with the evolving threats of modern AI.
GenAI: Fueling a new era of fraud threats
Fraudsters have not only kept pace with GenAI, but they have also weaponized it. Large language models (LLMs) are now part of a growing arsenal that enables criminals to scale, personalize and automate attacks with unprecedented precision.
What once required manual effort and technical expertise can now be executed at industrial speed, lowering the barrier to entry for bad actors while raising the stakes for businesses and consumers.
Take deepfakes, for example. These AI-generated videos, images and voice clips are increasingly used to spoof real people, bypassing biometric authentication and tricking even sophisticated systems. In the financial sector, fraudsters deploy deepfakes to secure loans under pretenses or gain access to sensitive data by impersonating executives and customers.
Then there’s the rise of synthetic identities: blended profiles that combine factual and fabricated data points to evade legacy verification tools. GenAI makes this fraud form easier than ever by generating realistic documents or items, such as receipts, which can fuel everything from refund fraud to identity theft during the onboarding process.
Even phishing, once a relatively blunt instrument, has evolved. GenAI can now mass-produce hyper-personalized phishing content, generating fake login pages or branded messages that appear nearly identical to the real thing. These campaigns don’t just trick individuals; they erode trust in entire digital systems.
Why legacy defenses can’t keep up
Legacy fraud prevention solutions weren’t designed for an environment where attacks mutate in seconds, and bad actors continuously innovate.
These systems typically rely on batch data processing, siloed databases and manual review layers, which make it nearly impossible to synthesize information from multiple sources or respond in real-time when fraud attacks unfold.
Their infrastructure struggles to handle the explosive growth in unstructured data and concurrent transactions driven by GenAI-powered fraud, resulting in both speed and coverage deficiencies.
Most rely on static data, such as device IDs, IP addresses, account history or velocity thresholds, and manually set geolocation blocklists that render teams blind to new tactics and fraud vectors until damage is already done. But by then, it’s too late.
Navigating the complete picture of user risk in the era of AI, with deepfakes, synthetic IDs and spoofed devices slipping through fragmented defenses, makes it even more challenging. Even standard safeguards, such as two-factor (2FA) authentication or basic device checks, can now be bypassed with automation and social engineering.
These legacy systems offer only moment-in-time assessments — not the continuous, contextual risk evaluation needed today. As fraud becomes more coordinated and adaptive, the only way to stay ahead is with real-time, transparent intelligence that can adapt as quickly as the threat evolves. Otherwise, risk teams are left with the frustrating choice between being too late or too aggressive.
Delivering better outcomes with real-time, explainable AI
While AI is responsible for making fraud more sophisticated, it’s also giving fraud prevention teams the tools they need to fight back. To be at the forefront, fraud teams need to detect intent earlier and act with precision, starting with digital footprint analysis, device intelligence and behavioral analytics.
The latest tools thrive on breadth and depth, pulling hundreds of live signals, from device fingerprints and behavioral patterns to location and transaction context. Fraud teams utilize these insights to create ever-evolving risk profiles that thwart attackers and enable legitimate customers to progress smoothly through the funnel. When adaptive systems replace static checkpoints, friction for real users decreases, approval rates increase and fraud prevention transforms from a bottleneck into a competitive advantage.
Achieving compliance and trust in the age of AI
GenAI changes the pace and complexity of compliance expectations. Regulators accelerate their demands, raising the bar for privacy, transparency and accountability in every industry. Risk leaders must now deliver unified visibility into every signal and workflow so compliance teams can act quickly.
Designed-for-purpose fraud systems embed both auditability and privacy at every layer. Transparency flows from the foundation, so every alert and action leaves a trail that executives and auditors can confidently follow. Risk scores become easy to defend (internally and externally) because teams know precisely which factors drove an approval or flagged a transaction.
Treated as strategic priorities, security and compliance move beyond box-ticking exercises. Today, high-performing organizations champion stakeholder transparency, nurture collaborative relationships across regions and functions and draw on detailed documentation to proactively respond to regulatory reviews. These operational habits fortify trust and resilience well before risks escalate.
Recommendations for risk leaders
Modern risk and fraud leaders drive transformation by staying nimble, well-informed and tightly coordinated. Modular detection rules and layered AI models enable teams to respond instantly to new fraud patterns without compromising the user experience. Internal culture shifts when model transparency and continuous monitoring bridge the gap between detection and decision-making.
Organizational silos work against a strong defense, so proactive leaders break them down. By transforming fraud, compliance and operations into an aligned, collaborative network, businesses close avenues that criminals exploit and shorten the cycle between detection and prevention. Regular model retraining, advanced simulations and multidisciplinary staff development reinforce momentum.
Sustaining this culture requires organizational commitment, not just new software. Fraud prevention grows most powerful with empowered employees at every level, a relentless focus on timely response and a leadership mindset that treats every new threat as an opportunity for innovation and progress.
By Tamás Kádár, CEO & Fraud Fighter