PaymentsJournal Podcast: Understanding the Effects of Fraud on Consumers

• Fraud’s emotional toll – shame, fear, and mistrust – reshapes how customers use financial services
• Silent, underinformed victims force banks to rely on behavioral analytics for detection
• Proactive, behavior‑based deposit monitoring helps institutions move from reaction to prevention

Financial fraud is no longer a rare event; for many consumers, it is a persistent risk that shapes how they interact with their financial institutions. The emotional fallout from scams–shame, fear, and loss of trust–directly influences customer behavior, and that behavior is precisely where banks and credit unions must focus to strengthen deposit fraud defenses.

Recent research highlighted via a new PaymentsJournal podcast shows that nearly all fraud victims–97%–change their behavior after a scam, becoming more cautious online, sharing fewer financial details, and in some cases abandoning entire payment types. Older customers often experience the greatest loss of trust, sometimes questioning whether any communication from their financial institution is legitimate. These emotional responses do not stay abstract; they surface in how customers open accounts, make deposits, and choose channels-behaviors that can either help or hinder deposit fraud detection.

Scams and fraud attempts now strike from every direction, including email, SMS, social media, and seemingly trusted brands, reinforcing a sense that “fraud comes from everywhere.” At the same time, fraudsters are exploiting new tools–deepfakes, “quishing” QR scams, and AI-driven social engineering–to increase their reach and sophistication. In this environment, relying on static rules or item-level checks is insufficient; institutions need to understand the full human and behavioral context behind each deposit.

The podcast underscores a substantial information gap around fraud education and warning signs. Less than a quarter of surveyed consumers consider themselves well-informed about how to recognize or avoid scams, and many are unaware of existing educational content offered by their financial institutions. Compounding this gap, 32% of respondents cite shame as a key emotional impact of fraud, which discourages victims from seeking help or disclosing suspicious activity.

Behavioral Analytics: A New Lens on Deposit Fraud

Deposit fraud is a major challenge for financial institutions. When checks are stolen, the fraudsters will either alter the payee and/or amount or leverage technology to create multiple counterfeits to extract as much funds as possible. However, financial institutions can leverage behavior analytics solutions power by AI to identify the activity of these deposit accounts to stop fraudsters. Scenarios include:

• Is this a new account suddenly exhibiting high-volume deposit activity, especially via remote channels?
• Does this surge of check deposits align with the customer’s historical cadence-frequency, timing, and typical check sizes-or is it a sharp departure?
• Has the customer ever deposited checks of this size or type before, and in what context (payroll, government, business, P2P, etc.)?
• Where is the deposit occurring geographically, and does that location match the customer’s normal footprint or indicate an unusual region or country?
• What device is being used to initiate deposits–a long-trusted device, or a newly observed device and operating system tied to other risk signals?

Furthermore, it benefits financial institutions to take it a step further and deploy image forensics to scrutinize the image of the check and consortium data to validate the transactional data.

By constructing a full behavioral picture–spanning account tenure, transaction history, channel usage, geography, and device intelligence–financial institutions can identify anomalies that may represent deposit fraud long before a check returns. This supports intelligent friction: targeted verification steps on out-of-pattern deposits that protect both the institution and the customer without overwhelming low-risk activity.

When institutions understand not only what a customer is depositing, but why and how that behavior compares to their historical norms, they can move from passive defense to proactive prevention in an era of faster, higher-stakes payments.