Fraud and scams have the same devastating effect on consumers and businesses, yet they represent two distinct types of criminal activity. Together, they form a dual threat that fueled $16.6 billion in reported internet crime losses in 2024. As banks lead the charge against these malicious actors, it is essential to understand the difference in how these crimes originate.
Unauthorized Fraud vs. Authorized Scams
- Unauthorized fraud is when a customer’s financial account is used without their authorization. Examples of this type of fraud include credit cards being stolen or accounts being exploited online.
- Authorized payment scams occur with a customer’s authorization, but under false pretenses. For example, a customer may send money to someone falsely advertising a bike on Facebook Marketplace.
The Federal Trade Commission outlines common red flags that indicate a scam:
- Scammers may impersonate a trusted organization, such as a government agency or bank.
- They may say there’s an emergency or a problem with your account.
- They may pressure you to act immediately.
- They may tell you to pay in a specific way, such as with crypto or specific payment apps.
The Scale of the Problem
Combating fraud and scams is a national imperative. Approximately 73% of U.S. adults have experienced some form of online attack, and in 2024, reported consumer fraud losses reached $12.5 billion, a 25% increase from the previous year.
Social media and telecommunications companies are major drivers of this growth in fraud and scams. A single social media network may show up to 15 billion scam ads daily. In one example, nearly 50% of fraud complaints at one major bank were linked to social media. Additionally, telecom platforms remain a primary entry point, with 36% of 2024 fraud reports originating from a phone call or text message.
Here is a breakdown of fraud loss statistics by state, per the FBI’s 2024 Internet Crime Report.
The Policy Landscape
The DOJ Strike Force represents one of the Administration’s current actions against overseas scam centers. However, the U.S. needs stronger policies to stop fraud and scams at the source. For decades, laws like the Bank Secrecy Act have helped prevent criminals from exploiting the U.S. financial system. But fraudsters targeting consumers directly via social media, messaging and spoofed calls face far less scrutiny, as these channels remain far less regulated despite their role in originating fraud and scams.
For more on the policy solutions needed to combat these crimes, in addition to state-level data and bank customer stories, visit U.S. Against Fraud.
