In brief:
- The UK continues to grapple with a significant rise in fraud cases, driven by advancements in technology and evolving criminal tactics.
- In 2025, artificial intelligence (AI) plays a dual role, both as a tool for fraudsters and as a means of combating fraud.
- Identity fraud remains the dominant threat, accounting for 59% of all UK fraud cases in 2024, with account takeovers surging by 76% and SIM swap fraud increasing by over 1,000%.
- Despite rising threats, there are signs of progress, with APP fraud cases decreasing by 20% in 2025, representing the lowest figures since 2021.
AI-driven fraud: A double-edged sword
Artificial intelligence has become a pivotal element in the fraud landscape, with its capabilities being exploited by criminals to enhance the sophistication of their schemes. AI is used to create deepfakes, synthetic identities, and voice cloning, making scams more convincing and harder to detect. According to Experian, in the first quarter of 2025 over a third of UK businesses reported being targeted by AI-related fraud, a sharp increase from the previous year. The use of AI in fraud is not limited to creating fake identities; it also includes manipulating financial transactions and bypassing security measures. However, as Experian's report shows, AI is also being harnessed by financial institutions to improve fraud detection and prevention, with 52% of UK businesses investing in AI analytics to combat fraud.
The power to use AI for both good and bad in relation to fraud has been borne out in two recent examples. On 24 September 2025, the UK Government announced that its new AI tool, the Fraud Risk Assessment Accelerator, had helped recover £480 million from April 2024 to April 2025. The tool, which assisted with the clawback of Covid-related loan fraud and other public sector fraud, accounted for the largest ever sum reclaimed by government anti-fraud teams in a single year. The tool has been such a success that it will now be licensed to other countries.
Conversely, AI company Anthropic, which developed the chatbot Claude, confirmed that its tool had been used to commit large-scale theft and extortion of personal data. The company confirmed that it had recently disrupted a sophisticated operation which had used Claude to write code which could hack into at least 17 different organisations, including government bodies. The hackers "used AI to what we believe is an unprecedented degree", both to make decisions about what data to steal, and how to frame ransom and extortion demands to victims.
Identity fraud: A persistent threat
AI also plays a role in identity fraud, which involves criminals using someone's personal information such as name, credit card number, or address, without permission, to commit fraud. Identity fraud remains the most dominant type of fraud in the UK, accounting for 59% of all cases reported to the National Fraud Database in 2024. Criminals continue to use impersonation tactics, often facilitated by AI, to deceive victims and gain access to personal information. In particular, AI has allowed criminals to create fictitious, believable messages and information more rapidly than ever before.
The rise in identity fraud has led to a consequential increase in account takeovers, with a 76% surge in cases in 2024 according to Cifas' annual Fraudscape report. Mobile phone accounts are particularly vulnerable, with unauthorised SIM swaps becoming a particularly prevalent new threat, increasing by over 1,000%. SIM swap fraud is a type of identity theft where criminals trick a mobile phone provider into transferring a victim's phone number to a new SIM card that the criminals control, causing a redirection of all the victim's calls and texts, and crucially, any two-factor authentication messages, to the criminals. This then enables criminals to access bank accounts, approve transactions, and apply for loans or credit. The demographic most targeted by identity fraud are individuals aged 61 and over, who account for around a quarter of all cases of identity fraud, although anyone can fall victim to these scams if they are not vigilant.
Remote purchase fraud: Exploiting e-commerce
Another fertile ground for fraud is e-commerce. As the sector continues to grow, so does the prevalence of remote purchase fraud. This type of fraud involves criminals using stolen credentials to make unauthorised purchases online. In 2024, according to the UK Finance Annual Fraud Report, remote purchase fraud cases surged by 22%, with losses amounting to £399.6 million. Fraudsters often compromise one-time passwords to facilitate these transactions, highlighting the need for more robust security measures in online shopping platforms. Despite efforts to combat this trend, the ease of access to personal data and the sophistication of fraud techniques continue to pose challenges.
A downward trend in APP fraud
We are however starting to see some success in efforts to prevent fraud. According to UK Finance, there has been a decrease in the number of overall APP fraud cases across 2025 to date by 20%, representing the lowest figures since 2021. This appears to demonstrate a potential success for the banking industry in combating APP fraud through heavy investment in fraud prevention technologies, and the Financial Conduct Authority introducing enhanced due diligence requirements for real-time monitoring and customer verification processes, which set the standard for businesses in the UK. General awareness and education campaigns about APP fraud techniques have also likely contributed to this positive trend, as consumers become more vigilant about suspicious requests for payments and transfers.
Conclusion
The fraud landscape in the UK is evolving rapidly, with technology playing a central role in both facilitating and combating fraudulent activities. AI-driven fraud, identity theft, and remote purchase fraud are among the most pressing challenges facing businesses and individuals. As the legal environment adapts to these threats, it is crucial for organisations to stay ahead by investing in advanced fraud detection technologies and fostering a culture of vigilance.
In particular, it is crucial that businesses stay up to date with the latest trends and techniques that fraudsters are employing to stay ahead of the curve. CEO deepfake fraud and text message scams asking for payments were relatively unknown and novel only a few years ago, which caused businesses and individuals to fall victim to these scams. However, as awareness has increased over the years, the frauds are more easily identifiable, and therefore avoidable. The need to be alert and up to date is ever increasing with the power of AI to create realistic messages, images, and voice recordings.
As fraud techniques continue to evolve and develop, the methods and techniques to combat them must also change. What this year has shown us so far is that AI has the power to be used for the good and the bad, but human awareness and strict monitoring techniques can be crucial at stopping fraudsters in their tracks.