AI-driven technologies are accelerating fraud worldwide. AI-powered deepfake software, automated phishing systems, synthetic identity fraud, chatbots, and advanced data analytics are enabling scammers to create highly personalized and convincing fraudulent schemes quickly and at scale.
This growth in AI-powered fraud is backed up by recent research. In the UK, UK Finance reported that in the first half of 2025 there were over two million confirmed cases of fraud, a 17 per cent increase on this time last year.
A separate report from Cifas and Experian found that identity-driven fraud has increased by 9.2 percent over the past three years, with AI-generated identities now accounting for 42 percent of all cases in the UK. The same report also found that potentially fraudulent savings account openings rose by 53 percent over that same period, largely driven by criminals creating identities with AI.
The risk is also growing rapidly in the United States. Deloitte predicts that generative AI could help drive U.S. fraud losses to $40 billion by 2027. The big question for financial institutions is how to prevent AI-powered fraud in 2026 while protecting customers, revenue, and brand reputation.
Collect Accurate Customer Contact Data
A strong place to start is by improving the accuracy of customer contact data, a foundational step in the Know Your Customer (KYC) process that some financial institutions still do not execute consistently. Access to accurate customer contact information, including name, address, email, and phone number, makes identity verification more reliable. High-quality customer data allows identity verification technologies to confidently cross-check submitted information against official databases and other authoritative sources without inconsistencies that can lead to false positives or false negatives.
In addition, fraudsters often exploit inaccurate contact data to create false identities or manipulate existing ones. Discrepancies in a phone number or email address, or an address linked to multiple identities, can be a clear signal that additional review is needed.
In fact, address verification is recognised as the cornerstone of contact data quality because access to current, accurate addresses makes it much easier to match and verify identities across multiple sources. That is why verifying the accuracy and legitimacy of an individual’s address should happen at the start of any identity-related process.
Lookup / Autocomplete Technology
Lookup and autocomplete technology can play a major role in improving customer contact data quality. With an address lookup tool, for example, organizations can provide accurate, correctly formatted address data in real time as a user begins entering their information during onboarding. These services are especially important given that roughly 20 percent of addresses entered online contain errors, including spelling mistakes, incorrect street numbers, and invalid ZIP Codes caused by manual entry mistakes.
These tools can also streamline address entry by reducing keystrokes by as much as 81 percent. That helps accelerate onboarding while improving the overall customer experience.
Similar technology can also be used to verify email addresses and phone numbers at the first point of contact, helping ensure these critical datasets are validated in real time.
Deceased and Change-of-Address Data
Synthetic identity fraud, in which criminals combine real and fabricated personal data to create a new identity, often depends on outdated, inactive, or deceased identities. The same is true for several other forms of fraud. That makes screening for deceased records and change-of-address data especially important, particularly because these are areas traditional fraud controls can overlook.
For the best results, financial institutions should incorporate National Change of Address (NCOA) data from the United States Postal Service (USPS), along with deceased suppression data, into identity verification and customer onboarding workflows. Doing so helps close off key entry points for fraudulent activity before bad actors can exploit them.
Fraud Prevention with Electronic Identity Verification (eIDV)
Data hygiene alone is not enough for effective KYC or fraud prevention, which is why an electronic identity verification (eIDV) platform is so important. These always-on tools can cross-check the names, addresses, email addresses, and phone numbers provided by prospective customers in real time during remote onboarding. The result is a stronger customer experience paired with more effective fraud prevention.
Compared with manual reviews, eIDV is a faster, more accurate, and more cost-effective way to verify identities and reduce AI-driven fraud risk. It also helps minimize human error while avoiding the additional staffing and training costs that manual verification processes often require.
Match IP Address to Home Address
Geolocation technology should also be considered as part of the identity verification process to help detect AI-enabled fraud. It can confirm whether an applicant’s physical location, based on their IP address, aligns with the address and other personal details they provide.
For example, if an applicant claims to live in Chicago, but IP address data from their device indicates they are actually logging in from thousands of miles away, that discrepancy should be treated as a significant red flag. In cases like this, an additional verification step is a prudent safeguard before approval is granted.
To Sum Up
As AI continues to amplify fraud and scams in 2026, financial institutions need to stay ahead of the threat. That means placing a stronger focus on data quality and electronic identity verification as criminals increasingly use fast-evolving technology to scale and refine their tactics.
Barley Laing has 27 years of experience in the technology and data sector. As the UK Managing Director of Melissa, he is dedicated to addressing the data quality and ID/compliance requirements of organizations in the UK and globally. He also oversees a team that offers data consultancy, sales, and technical support for their extensive range of leading web services, applications, SaaS, and on-premise software solutions that improve customer engagement and adherence to KYC, KYB, and AML regulations. Contact Barley at barley.laing@melissa.com or connect on LinkedIn.