5 Fraud Prevention Strategies for 2026

Businesses lose up to 5% of their annual revenue due to fraud that goes unnoticed. No industry is immune: banks, oil and gas companies, retailers, and iGaming platforms alike have to keep up with rapidly evolving fraud schemes. At the same time, regulators are tightening requirements around AML, KYC, and PSD2 compliance

So, fraud prevention isn’t just about regulatory compliance: it’s about avoiding those losses and reassuring your customers and investors. Here’s how to stay one step ahead of known and emerging schemes with five effective fraud prevention strategies.

1. Identity Verification

Targeted fraud schemes:

• Collusion
• Account takeover
• Multi-accounting
• Internal fraud
• Identity theft
• Credit card fraud
• Money laundering

Identity verification has been one of the top fraud prevention strategies for years, and it can take on many forms:

• Know your customer (KYC) checks. Required by law, KYC checks usually involve collecting customer information (such as name, date of birth, address, and ID number) and verifying their ID.
• Know your business (KYB) checks. KYB verifications are the equivalent of KYC checks for companies. They involve verifying the company’s address, registration and licensing documents, as well as the identities of the owner and directors. SEC fraud prevention strategies also suggest checking the PAUSE program database.
• Know your employee (KYE) checks. As part of the recruitment process, KYE checks involve collecting and verifying prospective employees’ information. They also include background checks on criminal and employment history.
• Email or phone number verification. Requiring ID information isn’t always mandatory under the law and may alienate users. In such cases, verifying an email address or phone number can still prevent multi-accounting and account takeover.

KYC/KYB checks are common fraud prevention strategies in banks, financial organizations, and insurance companies. In turn, eCommerce companies, retailers, and iGaming platforms largely benefit from email or phone number verifications. KYE checks are efficient across industries.

Frogo tip: Don’t rely on a single verification layer. Fraudsters often bypass basic KYC by using stolen IDs. Combining verification with device fingerprinting and behavioral monitoring creates a multi-layer defense that is harder to exploit.

Training & Awareness Campaigns
Continuous training ensures that employees and customers can recognize modern fraud schemes before they cause damage. Education on phishing, social engineering, and the growing threat of deepfakes empowers individuals to make safer choices online. By building awareness, businesses reduce the human factor risk — often the weakest link in security systems (NIST Cybersecurity Awareness Guidelines, 2024).

Advanced Analytics & Machine Learning
Fraud detection in 2026 relies heavily on advanced analytics. Supervised and unsupervised machine learning models analyze vast amounts of transactional data in real time, identifying unusual patterns and anomalies. This not only minimizes false positives but also enables early detection of new, previously unseen fraud tactics, keeping businesses a step ahead of cybercriminals.

2. Authorization & Authentication Flows

Targeted fraud schemes:

• Account takeover
• Data breaches for further impersonation
• Internal fraud

Authentication verifies the user’s identity at a given time, while authorization confirms that the authenticated user is allowed to perform a specific action.

Multi-factor authentication (MFA) is one of the most effective online fraud prevention strategies. Microsoft reported that MFA reduces the risk of account compromise by 99.22%.

But not all MFA is created equal:

• SMS-based MFA is vulnerable to SIM-swap attacks and SMS pumping, where attackers trigger mass verification messages, driving up operational costs.
• App-based MFA and hardware tokens offer higher resilience.
• Adaptive MFA triggers only under suspicious conditions (e.g., logging in from a new country).

You should require MFA during the initial authentication itself, as well as in case of:

• Account logins
• Suspicious account activity
• Specific security-sensitive actions (payment initiation, role changes, password change, etc.)

MFA is one of the top eCommerce fraud prevention strategies, but it’s also a must for any company that involves financial transactions of any kind (iGaming platforms, fintechs, etc.). Your employees’ access to internal systems should also be protected with MFA.

Case in point: A global SaaS company introduced adaptive MFA across its user base. Within six months, it cut ATO (account takeover) cases by 87%, while legitimate users reported fewer login frustrations compared to static MFA.

3. Device Fingerprinting & Behavioral Analytics

Targeted fraud schemes:

• Synthetic identity fraud
• Impersonation fraud
• Bot activity
• Credit card fraud (card testing, stolen card reuse across multiple accounts)
• Account takeover
• Promo and discount abuse

Due to the variety of both hardware and software, every device comes with a configuration as unique as a fingerprint. Device fingerprinting uses this fact to ID devices and detect suspicious activity by collecting and analyzing:

• Browser and its setup
• Device type and model
• IP address
• User actions during a session
• Timing of certain actions

When combined with AI/ML-driven behavioral analytics, this becomes one of the most powerful fraud prevention tools.

Lack of device fingerprinting is the number one roadblock in fraud prevention. But as far as fraud prevention strategies, device fingerprinting on its own isn’t as effective as when it’s combined with AI/ML-powered behavioral analytics (like it is in Frogo).

Frogo tip: In our experience, device fingerprinting alone detects ~70% of anomalies. But pairing it with ML that learns “normal” user journeys raises detection rates above 90%, while lowering false positives. This balance protects revenue without alienating good customers.

For example, Frogo uses AI/ML algorithms to continuously monitor user behavior and identify anomalies based on the established behavioral patterns. Integrating it into a website or mobile app to collect and analyze swaths of user signals enables the system to detect fraud risks in real time.

Device fingerprinting and behavioral analytics are among the recommended CFTC fraud prevention strategies for financial services. Frogo applies these methods in industries where we have real client experience, such as insurance, fintech, and iGaming.

4. Continuous Risk Profiling

Targeted fraud schemes:

• Money laundering
• Transaction fraud
• Credit card fraud
• Withdrawal fraud
• Promo and referral abuse
• Account takeover

Risk profiling involves scoring every customer or user based on the likelihood of them committing fraud. The score is recalculated regularly using real-time data. The high-risk segment can then be monitored more closely to nip potential fraud in the bud.

These continuous risk assessments typically take into account:

• Customer risk (affiliations, exposure to sanctions)
• Geographical risk (customer’s location, transactions with high-risk locations)
• Transaction risk (unusual transaction nature, frequency, volume, or patterns)
• Behavioral indicators (anomalies in account activity, behavioral changes)

Risk profiling is among the cornerstone banking and insurance fraud prevention strategies, and can help prevent fraud in SaaS, iGaming, and eCommerce.

Continuous profiling not only stops fraud but also supports regulatory compliance in industries like banking (AML/PSD2) and insurance (KYC/transaction monitoring).

5. Internal Controls

Targeted fraud schemes:

• Payroll fraud
• Procurement fraud
• Expense reimbursement fraud
• Financial statement fraud
• Internal fraud (unauthorized staff actions, bonus abuse, policy violations)

One report attributes over half of fraud cases to a lack of internal controls meant to prevent it. Those controls include:

• Segregation of duties: Ensuring more than one person is involved in executing a transaction
• Periodic reconciliations: Identifying when numbers don’t add up
• Authorization workflows: Requiring justification for specific transactions
• Internal log monitoring: Detecting suspicious or unauthorized activity within internal systems

Effective anti-fraud internal controls are among the most important fraud prevention strategies in local government. They’re also one of the well-established bank fraud prevention strategies. That said, any organization can benefit from robust controls (e.g., retailers, eCommerce businesses, iGaming platforms with large cash flows).

Frogo tip: Internal fraud is often overlooked compared to external threats. But for businesses with large teams, payroll and procurement fraud can be just as costly. Building internal monitoring dashboards and integrating them with fraud systems creates visibility across the entire organization.

The Rising Cost of Fraud in 2026

Fraud is no longer a marginal risk — it’s a direct attack on revenue, reputation, and customer trust. According to the Association of Certified Fraud Examiners (ACFE) 2024 Report, the average company loses 5% of its annual revenue to fraud. In sectors like financial services and iGaming, losses are often higher, reaching up to 10–12% (PwC Global Economic Crime Survey). Beyond monetary impact, fraud incidents also damage brand credibility, trigger regulatory fines, and result in customer churn.

Outsourcing Fraud Prevention: A Growing Trend

For many businesses, building an in-house fraud team is costly and resource-intensive. Hiring analysts, data scientists, and compliance officers can quickly escalate into millions in annual spend (Deloitte Fraud Management Insights). That’s why fraud outsourcing is gaining traction.

Specialized providers like Frogo offer fraud prevention as a managed service, combining AI-driven technology with human expertise (McKinsey Digital Risk & Compliance).

Outsourcing allows companies to:

• Scale fraud prevention instantly without heavy upfront investment.
• Access AI models trained on multi-industry fraud patterns.
• Ensure compliance with evolving regulations across jurisdictions.
• Free up internal teams for product innovation.

The Role of Generative AI in Fraud

One of the most disruptive trends in 2026 is fraudsters leveraging generative AI. Deepfake audio and video, AI-written phishing messages, and synthetic IDs generated at scale are already challenging traditional prevention methods (Europol Report on Criminal Use of AI; IBM Security AI & Fraud Trends).

Regulatory Compliance as a Driver

Fraud prevention isn’t only about reducing financial losses — it’s also about staying compliant:

• AML (Anti-Money Laundering): The Financial Action Task Force (FATF) issues global recommendations for customer due diligence and suspicious activity monitoring. Local regulators may adopt these recommendations as binding requirements.
• KYC / KYB: Required by banks, fintech, and gaming under EU AMLD6 and FinCEN KYC Rules.
• PSD2 / SCA: European firms must implement multi-factor authentication for payment flows (EBA PSD2 Guidelines).
• CFTC & SEC: Recommend device fingerprinting and behavioral monitoring to reduce market fraud (SEC Investor Protection Report)

Emerging Fraud Tactics to Watch in 2026

Fraudsters are constantly innovating. Some of the fastest-growing threats this year include:

• Friendly fraud & chargebacks: eCommerce loses ~$125 billion annually to chargeback abuse (Chargebacks911 Report 2024).
• Account farming in iGaming: Fraudsters create hundreds of accounts to exploit sign-up bonuses (H2 Gambling Capital Trends).
• BNPL fraud: Buy Now, Pay Later schemes face rising synthetic ID abuse (Experian BNPL Fraud Report).
• Cross-channel fraud: Phishing + SIM swaps + mule accounts are increasingly combined (FTC Consumer Fraud Report 2024).

Another critical trend is the use of AI-powered automation in large-scale fraud. Fraud rings are now building automated infrastructures where bots create synthetic identities, farm accounts, and execute small transactions to avoid detection. According to Juniper Research (Online Payment Fraud Report 2024), automated fraud attempts will cost businesses more than $362 billion globally between 2023 and 2028.

Moreover, cross-border fraud collaboration is accelerating: fraudsters are leveraging money mules across multiple countries, combining weak KYC regimes with instant payments to move funds rapidly. The FATF (Financial Action Task Force) warns that cross-border mule networks are among the top 3 AML risks in 2026. For industries like iGaming and BNPL providers, this creates new vulnerabilities where a single compromised ecosystem can cascade across regions.

These developments highlight why businesses need not only traditional fraud prevention strategies but also dynamic, AI-driven risk profiling and online fraud prevention strategies that adapt in real time.

Building a Fraud-Resilient Culture

Technology alone can’t prevent fraud. Employees, customers, and partners all play a role. Building a culture of fraud resilience means:

• Training employees on phishing and insider risks (ACFE Anti-Fraud Training Guide).
• Encouraging customers to adopt MFA (Microsoft Digital Defense Report).
• Running red-team exercises to test fraud systems (MITRE ATT&CK Insider Threats).

Fraud Prevention Strategies 2026 — Summary Table

Final Thoughts

While these five fraud prevention strategies have proven their effectiveness, you should incorporate only the ones that make sense for your business. Depending on your domain, size, and jurisdiction, your compliance obligations will differ, and so will the fraud risks you’re facing. Tailor your fraud strategy to them; don’t look for a one-size-fits-all solution.

Looking for a fraud prevention solution that’ll adapt to your fraud risks? Frogo combines static and dynamic rules and AI predictions to combat fraud in iGaming, financial services, eCommerce, and more. Talk to our experts to discuss how we can customize Frogo to match your fraud risk profile.