Have you ever received a message claiming your unpaid highway tolls will head to collections unless you pay right away? Or maybe you tried to buy something secondhand online, but the seller went silent after you sent money through a payment app?

These are examples of payment fraud, and its rise is the flip side of technology that helps us send money easier and faster than ever. That speed has unlocked new levels of convenience, but it can also create challenges when something goes wrong.

Staci Shatsoff, a secure payments expert at the Boston Fed, explains how consumers can spot fraud risk and better protect themselves from payment fraud on an ever-evolving payments landscape. 

Maureen Heydt:
Have you ever received a text message claiming that your unpaid highway toll fees are heading to collection unless you send a payment right now? Or maybe you tried to buy something secondhand online, but the seller stopped responding after you sent the money through a payment app.

While technology helps us send money easier and faster than ever, that speed has also made us more vulnerable to fraudsters.

So, the question is, how can we as consumers better protect ourselves? 

Welcome to Six Hundred Atlantic, a podcast produced by the Boston Fed. I'm Maureen Heydt, and today, we're speaking with Staci Shatsoff, one of our secure payments experts. We’ll talk about common types of fraud, spotting fraud risk, and how to prevent it from happening.

Staci, welcome to the podcast. 

Staci Shatsoff:
Thanks for having me.

Maureen Heydt:
Let's start with the sheer number of annual data breaches and notices about the theft of personal information. It's an enormous amount, right? And so, what are the recent numbers of total fraud losses and scam losses in the U.S.?

Staci Shatsoff:
So, in 2025, according to the FTC, consumers reported a record $15.9 billion in fraud losses. This is a pretty significant increase from the $12.5 billion that was reported in 2024. Just to give you an idea of the magnitude of that number, $15.9 billion could fund roughly 400,000 four-year college tuitions, so a pretty significant number. In terms of how many were reported, in 2025, it was roughly 3 million, and in 2024, roughly 2.6 million. I also would just point out that that's likely severely under-reported, so, it's estimated that only around 10% or less of incidents are actually reported to the FTC. So, if you take that $15.9 billion number and think about the under-reporting, it's likely much larger than that.

Maureen Heydt:
Thanks for the information, Staci. Can you put into context what those kinds of losses mean, both on a broad economic scale and for individuals? The U.S. has a massive economy, so is it able to just sort of absorb those losses?

Staci Shatsoff:
So, unfortunately, that's not generally the case. $15.9 billion in a year is a pretty significant number. That's a 430% increase from 2020, just to give you an idea as well as how much it's increasing. The losses are felt in many different ways. Consumers are often losing their life savings. There's elderly folks who are forced to go back to work right, because their retirement has now been taken from them. There's also significant emotional impact that comes with these losses.

From a small business perspective, small businesses could end up closing after one incident that can really impact their bottom line, which especially could impact towns. A lot of small towns are made up of a lot of small businesses, and if there's hit by fraud loss, then those businesses would be forced to start shutting down. The large corporations can absorb these losses a little bit better, but again, there is an impact. The cost of goods would likely go up because they do have to recover the funds in some way.

Maureen Heydt:
In terms of individuals, should Americans just assume at this point that their personal information has been stolen? And if so, what are the implications of that for the everyday person?

Staci Shatsoff:
I don't want to be the bearer of bad news, but I would say likely, yes, your information is out there in some way, shape, or form. Just to give you, again, some data points. In 2025, there were roughly 3,300 data breaches, according to Identity Theft Resource Center, and that impacted roughly 278 million personal records. So, all that to say, likely your information is out there, but there's things that you can do to protect yourself, right, so monitoring your credit is a great way to understand if somebody has and is using your information. Frequently checking all of your accounts to make sure there's no unauthorized transactions that have occurred is another great way to just be proactive and protect yourself.

Maureen Heydt:
You said something interesting at a presentation I recently attended, which was that all scams are fraud, but not all frauds are scams. What did you mean by that?

Staci Shatsoff:
So, every scam is a type of fraud. A scam is the use of deception or manipulation to achieve financial gain, but fraud often covers a broader range of illicit activity. So, for example, a type of fraud could be somebody using your credit card information that they stole to make an unauthorized transaction. So, because they stole that information, it wasn't a scam, but it is you know, a type of fraud. So, fraud covers a broader range of illicit activity.

Maureen Heydt:
Can you break down the anatomy of a scam, the basic steps of it, starting with picking a target?

Staci Shatsoff:
Absolutely, so, we like to think of the basic steps in five different steps. First would be the setup, so where the criminal is targeting the victim. That could be a random victim or that could be somebody that they've personally selected. The second step would be building trust. That's where that emotional piece of it comes in. There's trust that's built with the criminal. The third step would be the hook, the ask. When the criminal is asking for something, whether it's something monetary or it's personal information that they're trying to get from their victim, they will ask for something after that trust is built. The fourth step would be the exit, so the vanishing act. After they get what they want, they disappear. Then the fifth step is repetition or retargeting. Again, these criminals are not generally targeting one person. They're using tactics across multiple people, whether it's at the same time or different times, they do retarget using the same tactics.

Maureen Heydt:
What happens when a fraudster finally gets hold of a financial account? What comes next? It's a lot more than just emptying it out, right?

Staci Shatsoff:
It's rarely just a simple, you know, "Let's take the money and run," situation. It's likely the beginning of a comprehensive account takeover. What that means is the criminal will likely exploit the account's history and security. They may change the credentials, so the actual account holder is not able to log into their own account anymore. They may steal personal information, right so, once you get access to that account, you can see name, address, phone number, date of birth, social security number perhaps, and other personal information, so the criminal can take that and use that later to recreate your identity or create a synthetic identity. They will, of course, generally drain the funds, at least some of the funds, but they may also use it for money laundering. So, you may see a lot of in and out transactions where the criminal is using your account to try to move illicit funds.

Maureen Heydt:
Okay, that's a lot and I'm hoping you know, we could talk about some of the different kinds of fraud, starting with one we've discussed on this podcast before, which is check fraud. So maybe it seems surprising that this is still an issue in a digital age, but can you update us a bit about what's happening in that space?

Staci Shatsoff:
Check usage is going down, but the usage is still in the billions every year with trillions of dollars in circulation. So, we're still talking about an extremely large amount of checks that are being used, and with these checks, opportunity is created for criminals to intercept the checks. Check fraud is a very lucrative opportunity. Fraudulent checks are very hard to spot, there's a lot of manual detection, and technology that's available has made it very, very easy for criminals to create very realistic fake checks. Criminals also work together to share information. Once they have the information off the check, they can share it and they can create multiple counterfeit checks very easily using that information.

Maureen Heydt:
And relatedly, what do experts mean when they say that checks are an inherently insecure payments instrument?

Staci Shatsoff:
It's the nature of a check that makes it inherently insecure. It is a physical item, and on that physical item contains your routing number, which is tied to your bank account, as well as your name and address, and sometimes your phone number. So, there's a lot of personal information available on that physical item. If you think about the nature of a check, you take that physical item and you're either handing it to someone, or often these days, we're putting it in the mail. So now it's out in circulation, it's going through the mail system, and when it gets to its destination, it's sitting in a mailbox waiting for somebody to grab it. We're seeing, unfortunately, a lot of mail carriers robbed for the mail because the criminals are aware that there's likely checks in there, and again, it's a very lucrative way for them to commit fraud.

Maureen Heydt:
On the flip side, we also have digitally enabled scams, things like synthetic identity fraud using generative AI. This can involve deep fake videos and social media manipulation. Can you talk to us a bit about those tactics and how they're playing into the fraud landscape?

Staci Shatsoff:
I just want to take a minute to define synthetic identity fraud in case people aren't aware of what it is. It is essentially the creation of a fake person. It's using a combination of PII to fabricate a person or entity in order to commit a dishonest act for personal or financial gain. So, the creation of a fake person used to be a bit more challenging. There wasn't the scale of information available that there is today. Criminals have access to a lot of PII that they can use to create these folks, and when they're creating these synthetic identities, they have technology available that makes it easier to make them more convincing, and they can personalize them. They can also scale this very quickly. They can create voice impressions within seconds that can go with these synthetic identities. They can create deep fake videos using AI that can really make these identities look very, very lifelike. Then they can replicate documents very easily, and these new documents look very real compared to what we used to see.

Maureen Heydt:
And PII stands for?

Staci Shatsoff:
Personally identifiable information.

Maureen Heydt:
So, things like?

Staci Shatsoff:
Things like name, address, date of birth, social security number, or tax ID number.

Maureen Heydt:
Got it. So, we've talked about 20th century style fraud with checks and 21st century style fraud with AI, and it brings to mind something else you said at a presentation, which is that younger people and older people alike are equally as susceptible as falling for fraud. Can you go into that a little bit? What psychological tactics do scammers use to victimize even the savviest of individuals?

Staci Shatsoff:
Absolutely. So younger and older people are highly susceptible, mainly for different reasons. So older folks tend to be targeted. They generally have higher amounts of money that are available, so they are targeted differently. But younger people are also victimized. They tend to be more savvy online, right, so they might be targeted through the online channel more.

But the tactics are very similar across all age ranges. There's generally a sense of urgency or pressure that's used by the criminals. They might impersonate a legitimate person or business. So maybe they're acting as a family member who's in trouble or they're acting as a service that you use. They often use too good to be true offers for victims as well and they can employ fear and threats to manipulate their victims. So, there's a lot of different tactics that are used slightly differently depending on the age, but criminals will target any and all age ranges.

Maureen Heydt:
Looking at the totality of all of that, how does the Federal Reserve help financial institutions support their customers when it comes to mitigating fraud?

Staci Shatsoff:
So, we are here to support financial institutions. We do a lot of education with financial institutions on different fraud trends, on different mitigation tactics that are available. We have toolkits that are available for the financial institutions on different types of fraud. I know we've mentioned check fraud today; we have a check fraud mitigation toolkit that's available. We have a scam mitigation toolkit, synthetic identity fraud mitigation toolkit. Within those toolkits, there's not only information that's available for the employees of the financial institutions to help with their training, but also information available in terms of what happens when a consumer is a victim of one of these types of fraud. The FIs can use that information to then help their customers, because again, especially with scams, the financial institution is generally the last step in that process. The scam has already happened; it's just the transaction that the financial institution is involved in. There is information in there to help financial institutions have those conversations and really understand where to send their customers to get help.

Maureen Heydt:
We'll be sure to include links to those in the show notes for anyone interested in checking them out. Finally, what's your best advice to consumers about mitigating fraud? Are there any general principles to remember?

Staci Shatsoff:
I would say be prepared. You never know when you may be a victim, but if you can prepare yourself should you fall victim, you will be in a much better spot likely. So, a couple of things to remember. Monitor your credit is one that we mentioned today. That just helps you gain insight into what may be happening with some of your information. I would also maybe suggest freezing your credit. If you think about how often you are applying for a new line of credit, it may not be that often. So, if you're not doing that, you may want to look into freezing your credit. You can always unfreeze it whenever you need it and then freeze it again. That will help limit criminals from being able to use your information to open lines of credit.

Then I would also suggest considering freezing your child's credit and elderly credit. They are especially targets in these types of scenarios. They often aren't monitoring their credit, most people are likely not monitoring their child's credit because it's just not something that we think about. Same with elderly, the elderly likely aren't using their credit and it's not something that's monitored, so that makes them more susceptible for criminals.

Maureen Heydt:
Alright. Well, thank you for your time, Staci. We really appreciate the opportunity to learn more about how to stay vigilant against the latest fraud tactics.

Staci Shatsoff:
Thanks so much for having me.

Maureen Heydt:
You can find more information on everything we discuss today on our website. Check out bostonfed.org/six-hundred-atlantic, where you can listen to interviews as well as our podcast seasons. You can also subscribe to our email list to stay up to date on new episodes. And don't forget to rate, review, share, and subscribe to Six Hundred Atlantic on your favorite podcast app. I'm Maureen Heydt, signing off for another episode of Six Hundred Atlantic. Thanks for listening.