The Fraud Crisis Facing Finance: Why We’re Now in a Code-Red Moment

“The United States is caught in a global conflict with scammers and so far, it is not winning.” So starts a recent report by the international nonprofit Aspen Institute’s Financial Security Program, which goes on to sound an urgent warning about threats to the integrity of our financial system from purveyors of financial fraud:

“Working mostly from safe havens overseas, criminals are exploiting America’s communications, banking, and digital platforms to deceive Americans into sending money, divulging sensitive information, or worse. A majority of Americans say they get scam calls, emails, and texts at least weekly, and more than 50 million U.S. adults have lost money to an online scam or attack. This causes American households to lose more than a billion dollars every week. … Often, scammers are part of transnational criminal organizations that use fraud and scams to fund other crimes, including drug and human trafficking. In addition to lowering criminals’ barriers to entry, cryptocurrency and artificial intelligence-powered deepfakes are fueling the scams boom, enabling ever-faster and more powerful forms of criminal deceit.”

Financial scams, which used to be considered mere nuisances, have become a major vector for wealth extraction:

• Fraud drains an estimated $158 billion a year from Americans, siphoning wealth at a scale comparable to illicit drug trafficking.
• 1 in 5 U.S. adults (53 million) reported having lost money to an online scam or attack.
• 41% of U.S. adults (106 million) say a scam email, text or call led them to give away personal information.
• Reports of scam losses have more than tripled since 2019.

To make matters worse, technology has shifted the economics of fraud in favor of criminals: AI, deepfakes, cheap spoofing infrastructure, crypto rails, SIM farms and global messaging networks give scammers asymmetric power. There currently are more tools to perpetrate fraud than there are to prevent it. Moreover, there is no unified national anti‑fraud strategy: Federal agencies operate with siloed databases (IC3, FTC Sentinel, FinCEN SARs), and scammers exploit slow law‑enforcement coordination and outdated data systems.

A Coordinated Response Among Consumers, Business and Government

If there is one thing we have learned about fraud prevention, it’s that putting the onus of responsibility entirely on the consumer doesn’t work – it requires shared responsibility across consumers, businesses and government.

For consumers, preventing fraud starts with awareness, vigilance and strong digital hygiene. Keeping your operating system up to date, staying current with reputable antivirus software and using multifactor authentication are essential first lines of defense. Being mindful of the links and attachments you click on and the information you share online can help you avoid becoming a target. Reporting suspicious activity promptly – to banks and businesses but also law enforcement – can not only protect your own finances but also help identify broader patterns of criminal behavior.

Businesses must take a proactive stance in both detecting and deterring fraudulent activity. This includes implementing robust internal controls, investing in secure technologies, training employees to recognize red flags and communicating transparently with customers when threats emerge. Companies also play a vital role as information hubs, often spotting fraud trends earlier than others. By sharing insights with industry peers and public agencies, businesses can strengthen the broader fraud‑prevention network and help minimize risk across the market.

Perhaps the biggest gap in fraud prevention lies with state and federal government agencies. These agencies can serve as the backbone of a coordinated anti‑fraud strategy (perhaps led at the federal level by an Anti-Scam Czar) by setting regulations, enforcing laws and enabling cross‑industry collaboration. Through updated policies, public education campaigns and data‑sharing frameworks, government entities can help ensure that both consumers and businesses operate in an environment where fraud is harder to perpetrate and easier to prosecute. When government partners effectively with the private sector and the public, it creates a unified system capable of responding swiftly to evolving threats.

Left unchecked, fraud will inevitably undermine the trust and confidence in our financial system. In the wake of the Great Financial Crisis in 2008–2009, regulators, Congress, the administration and the financial services industry worked together to fundamentally restructure the infrastructure of the financial system to shore up and ensure more resilient stability in the 21st century. We’re starting to see similar action today: For example, FINRA has begun to test a new Fraud Fusion Center, and the Securities Industry and Financial Markets Association is engaging with the Global Anti Scam Alliance, an international consortium of cybersecurity experts in both public and private sectors. On Capital Hill, Senators Bill Hagerty (R-TN) and Ruben Gallego (D-AZ) reintroduced the Financial Exploitation Prevention Act, legislation that is designed to give the financial industry better tools to address suspected financial exploitation.

Nothing less than a coordinated ecosystem-wide response is required today to combat the virulent threat of criminal fraud.

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