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Rising fraud prompts new partnerships for Alloy, Mastercard, Sumsub

New report says one third of financial firms lost $1 billion to fraud last year
Rising fraud prompts new partnerships for Alloy, Mastercard, Sumsub
 

There is good news and bad news on the fraud front. The good news is that Jimmy next door is unlikely to be hacking into your laptop to commit identity theft and fraud. The bad news is that fraudsters are much more organized than that: a release from Alloy says its newly released 2025 State of Fraud Report finds that fraud is rising steadily, and that professional fraud rings are the main culprits behind attacks.

The results, based on a survey of 486 senior-level finance and fraud professionals in the U.S., show that 60 percent of financial institutions and fintechs saw fraud grow across consumer and business accounts in the last year. Financial criminals and fraud rings are identified as the biggest threat by 71 percent of respondents.

The costs of fraud continue to rise, with 31 percent of financial organizations reporting more than $1 million in direct fraud losses – up from one in four the year prior. Meanwhile, recent government data shows that losses resulting from fraudulent Paycheck Protection Program (PPP) loans and fraudulent unemployment claims total $255 billion.

“In the last four years, we saw a massive uptick in organized financial crime, driven by PPP loan fraud that helped fund criminal organizations who then systematically targeted FIs and fintechs,” says Alloy CEO Tommy Nicholas.

“But it has taken these companies time to accurately understand who is responsible for these attacks, because, at first glance, it can look like a regular person woke up one day and decided to commit a crime (first party fraud). Understanding that most fraud is actually coming from organized crime rings has caused a big shift in how the financial services industry fights bad actors.”

Part of that shift involves AI. While the report suggests “AI hype has become reality,” with 99 percent of financial organizations saying they currently use AI to fight fraud, Nicholas believes 2025 will see “fewer overhyped promises about AI and more tangible applications of machine learning to address fraud in real-time. Rather than relying on standalone AI tools, financial organizations will shift their focus to investing in platforms that centralize identity and fraud risk across their organizations.”

Ninety-three percent of financial organizations are planning to make ongoing investments in fraud prevention in 2025, with 62 per of respondents increasing their investment in fraud prevention as a result of recent regulatory scrutiny. Eighty-seven agree that the amount of money saved by fraud prevention investment outweighs its cost.

Banking remains the ripest target for fraudsters, with enterprise banks seeing the biggest increase, and more fraud occurring in online and mobile banking than any other channel. Professional fraudsters are taking advantage of consumer information exposed by AI-assisted scams and data breaches. The leading fraud types reported are credit card fraud, account takeover (ATO) fraud, identity theft, and check fraud.

On the latter, the report discloses further bad news regarding Jimmy: his bush league fraud schemes might be a threat, after all. It quotes Trace Fooshée, a strategic advisor at Datos Insights, who says “many fraud executives have expressed concern that the low barriers to entry associated with check fraud and authorized payment scams coupled with the pervasive perception of economic uncertainty that began with the pandemic, but that stubbornly persists today, has created the ideal conditions for expanding the ranks of both ‘citizen fraudsters’ and organized crime rings.”

As such, it’s back to the old X-Files credo, Trust No One – known more commonly in tech circles as zero trust.

Alloy, Q2 collaborate to deliver ‘joint ongoing fraud monitoring solution’

Alloy is entering a strategic partnership with Q2 Holdings Inc., an Austin, Texas firm that provides cloud-based virtual banking tools for financial services, to deliver what a release calls “a joint ongoing fraud monitoring solution for Q2 Digital Banking customers.”

Alloy’s centralized identity decision engine powers the tool’s fraud detection and prevention capabilities, addressing fraud risks such as account takeover and peer-to-peer (P2P) payment fraud with real-time digital banking user action risk assessments and ongoing monitoring.

“We believe that successful fraud prevention starts with a holistic approach to understanding identity,” says Parilee Wang, Chief Product Officer at Alloy. “That means not just tracking the suspicious movement of money, but also separating out the identities of fraudsters from those of genuine customers. Our joint solution with Q2 brings together the various data sources financial institutions need to more clearly understand their customer so they can better reduce criminal activity throughout the customer lifecycle.”

“Banks and credit unions need scalable fraud solutions to combat growing fraud threats while maintaining an engaging customer experience,” says Jeff Scott, VP of fraudtech solutions at Q2. “Our partnership with Alloy will enhance existing native fraud monitoring capabilities within Q2 Digital Banking, providing a scalable, flexible, and identity-centric approach to fraud monitoring across digital channels.”

Mastercard and FreedomPay partner on payment gateway

Mastercard has entered a strategic partnership with FreedomPay, which a release says will “provide businesses worldwide with a simplified and extended global payment gateway solution.”

“The complexity of navigating diverse payment systems across borders can hinder the growth of international commerce,” says Chris Kronenthal, president of FreedomPay. “By joining forces with Mastercard, we are breaking down these barriers and empowering merchants with a single, unified platform for seamless global transactions.”

Benefits of the alliance also include enhanced security, simplified integration, and access to business intelligence and advanced fraud prevention tools.

“Mastercard is committed to providing businesses with the tools and flexibility they need to thrive in today’s dynamic global market,” said Kaushik Gopal, EVP, Mastercard Enterprise Gateway Solutions. “This partnership with FreedomPay enables us to deliver a best-in-class payment gateway solution that simplifies cross-border transactions and unlocks new growth opportunities for our customers.”

Sumsub joins Payments Association EU for a seat at the fraud table

Sumsub has joined the Payments Association EU, an industry group of stakeholders in the payments sector. A news item notes that the company joins companies including Mastercard, Visa, and Paypal in the group, and as a patron-level member “will have the opportunity to speak to policymakers and senior industry leaders to advocate for more effective protections against the growing threat of identity fraud.”

Deepfake fraud incidents rose by 142 percent in Europe between 2023 and 2024, and fraud in the fintech and banking sectors grew by 156 percent and 162 percent over the same period, respectively.

Julia Bonda, Business Development Director, UK & EU at Sumsub, says the company is “completely aligned with the Payments Association” and has “joined the European organization to be at the forefront of the defense against digital payments fraud.”

“As fraudsters become increasingly efficient, firms must be a step ahead and implement multi-layered, AI-powered security approaches,” Bonda says. “Digital payments are the bedrock of global economies, and keeping them secure and reliable is essential. Joining the EU Payments Association gives us a seat at another important table, and we look forward to being a valued part of this organisation to advocate for better ID fraud regulation.”

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