Race Past Holiday Fraud: 5 Steps Issuers Must Take Today

The holiday shopping season has always been a magnet for fraudsters, but the threat landscape going into 2025 is fundamentally different. This year, fraud is faster, more automated, more AI-driven and more likely to hit every part of the customer journey—not just checkout. 

Several new trends are shaping the risk outlook: 

• TransUnion reports that 4.2% of U.S. e-commerce transactions during the 2024 Cyber Five period were suspected fraud, underscoring how concentrated fraud during the holidays has become. 

• An AARP Fraud Watch survey found 89% of U.S. adults experienced at least one fraud attempt in the past year, including fake shipping alerts, charity scams and phishing texts—all common holiday scams. 

• Socure identified that 13% of Americans admitted to committing some form of first-party fraud during the holiday season, reminding us that holiday fraud prevention must address both external attacks and internal abuse. 

• The FBI’s 2025 Emerging Threat Assessment warns that AI-generated fraud—including deepfake voices, synthetic identities and AI-automated credential-stuffing—is projected to accelerate through 2026. 

• Sumsub reports a 311% year-over-year surge in synthetic-identity document fraud in North America, signaling an accelerating threat heading into future holiday shopping seasons. 

Against this backdrop, issuers must rethink how they approach holiday fraud prevention. Protecting customers now requires real-time data, AI-driven intelligence and coordinated controls across every rail and money-movement path. 

Below are five updated strategies designed for the realities of the 2025 holiday shopping season. 

1. Shift into “always-on” fraud mode—holiday attacks no longer follow a calendar

Fraud activity used to peak around a handful of major shopping days. Today, attackers begin weeks before the holidays, probing systems, testing credentials and staging synthetic identities. 

The 4.2% fraud rate observed during the 2024 Cyber Five period is no longer an anomaly—it’s a signal that the entire holiday shopping season is effectively a fraud “high-alert period.” 

How issuers can prepare: 

• Operate authorization, posting and fraud controls on a 24/7/365 real-time basis, not batch windows. 

• Use behavioral and contextual signals—device, IP velocity, geolocation mismatches—as part of real-time risk scoring. 

• Tighten holiday thresholds dynamically rather than waiting for confirmed fraud cases. 

Platforms built with real-time ledgering, authorization and risk decisioning at the core give issuers the operational readiness needed during peak holiday shopping seasons. 

2. Treat first-party fraud as a top-tier risk—not an edge case

This year, first-party fraud is expected to grow significantly. Refund abuse, false “item not received” claims and intentional chargebacks tend to spike when promotions, shipping delays and high transaction volumes collide during the holiday shopping season. 

With 13% of U.S. adults admitting to committing first-party fraud during the holidays, issuers must treat this as a mainstream risk. 

What issuers should focus on: 

• Use AI models to detect patterns such as repeated refunds, mismatched device/postal behaviors or abnormal return cycles. 

• Leverage unified data to tie together purchases, disputes, reversals and account activity in real time. 

• Apply dynamic rules that escalate only when patterns indicate possible abuse—avoiding unnecessary friction for good customers. 

The issuers that successfully navigate first-party fraud are those that see it early and treat it holistically, not transaction by transaction. 

3. Strengthen identity and behavioral defenses—AI has supercharged the attacker’s toolkit

Fraudsters now use AI to generate synthetic identities, mimic customer behavior, automate credential-stuffing and launch targeted phishing campaigns—including increasingly sophisticated holiday scams. Attacks that once required coordination and craft are now executed at scale. 

Industry estimates suggest AI-enabled fraud activity will grow more than 20% annually through 2026, making static or rule-only systems insufficient. 

Where AI helps issuers level the playing field: 

• Behavioral analytics that identify subtle deviations from normal spending or session activity 

• Machine-learning–based anomaly detection that spots unusual velocity or transaction flows 

• Dynamic, context-aware risk scoring that adapts to new attack patterns instantly 

• Real-time cross-rail intelligence—so a high-risk pattern on RTP, FedNow, card rails or ACH informs decisions everywhere 

When AI enhances the authorization and risk stack, issuers can detect patterns invisible to traditional controls. 

4. Protect all money-movement rails—not just checkout and card transactions

Holiday fraud doesn’t stop at e-commerce checkout. Scammers and fraud rings increasingly exploit: 

• Wallet top-ups 

• P2P transfers 

• Marketplace payouts 

• Refund and disbursement flows 

• Credit push payments 

• Account-to-account transfers 

This makes siloed fraud defenses increasingly ineffective during periods of elevated fraud during the holidays. 

Modern protection requires: 

• Real-time visibility across cards, accounts, ACH, RTP, FedNow and digital wallets 

• Consistent policy enforcement across all money-movement types 

• Automated exception handling that quickly resolves misroutes or suspicious reversals 

• Centralized routing and authorization logic 

A unified payment orchestration platform—one that manages posting, routing and real-time risk across all rails—gives issuers the ability to stop fraud wherever it enters, not just at checkout. 

5. Keep the experience seamless—customers don’t wait during the holidays

Holiday shoppers expect instant confirmations, fast refunds and real-time support. Overly aggressive fraud rules can cause false declines, abandoned carts and frustrated customers. 

As holiday scams become more sophisticated, issuers must find the balance between friction and protection. 

How to strike that balance: 

• Use dynamic, risk-based authentication instead of blanket step-up measures. 

• Provide real-time transaction notifications and transparent status updates. 

• Tune fraud rules seasonally—tightening for high-risk behaviors, relaxing for trusted profiles. 

• Empower customer service teams with unified transaction data to resolve issues rapidly. 

Customers remember the banks that protect them and keep their holiday shopping season experiences smooth. 

Looking Ahead: Holiday Fraud Will Only Get More Sophisticated

The 2025–2026 holiday shopping seasons will be among the most complex fraud environments financial institutions have ever faced. Fraud is now real-time, multi-rail, AI-powered, highly adaptive, behaviorally engineered and globally orchestrated. 

Issuers that succeed will be those operating with real-time ledgering and posting, AI-driven behavioral intelligence, unified risk and money-movement orchestration, dynamic configurable workflows and full cross-rail visibility. 

Banks, credit unions and fintechs that modernize now—not during the next fraud wave—will be best positioned to protect customers and maintain trust during the year’s most critical shopping season. 

Ready to stop fraud in its tracks? Contact i2c to protect your program with award-winning, advanced fraud detection and scalable fraud management services that adapt to your needs. 

Holiday Must-Knows: 

How does real-time issuer processing help prevent holiday fraud? 

Real-time issuer processing allows authorization, posting and fraud decisioning to occur instantly, rather than after the fact. During the holiday shopping season, platforms designed like i2c’s—with real-time ledgering and inline risk controls—help issuers stop suspicious activity before funds move. This reduces exposure when fraud volume and velocity spike during peak shopping periods. 

What strategies protect multiple payment rails from fraud? 

Protecting multiple rails requires unified orchestration across cards, accounts, ACH, RTP, FedNow, wallets and disbursements. Systems such as i2c’s Payment Hub enable shared risk intelligence, so anomalies detected on one rail can influence decisions on others in real time. This approach limits the blind spots fraudsters exploit during periods of elevated fraud during holidays. 

What is first-party fraud and why is it a growing risk during holidays? 

First-party fraud occurs when legitimate customers misuse systems through false refund claims, chargebacks or “item not received” disputes. During the holiday shopping season, higher transaction volumes and shipping delays increase both opportunity and ambiguity, making this behavior harder to detect. Issuer platforms with unified transaction histories—like those supported by i2c—help surface these patterns earlier without overcorrecting for legitimate customers.