AI-driven fraud has surged dramatically in the UK, with over a third of businesses (35%) reporting attacks linked to artificial intelligence in the first quarter of 2025—a significant increase from 23% the previous year. This escalation is largely attributed to advanced techniques such as deepfakes, identity theft, voice cloning, and the creation of synthetic identities. These methods are rapidly becoming the tools of choice for modern fraudsters. Let’s explore the latest report from Experian about AI-driven fraud.
Most Common Types of AI-Driven Fraud
The Experian report highlights several prevalent forms of fraud impacting UK businesses:
- Authorised Push Payment (APP) fraud, money mule schemes, and scams: Reported by 47% of businesses.
- Transactional payment fraud: Affects 38% of companies.
- Identity theft: Experienced by 34% of respondents.
- Account takeover: 33% of businesses reported incidents.
- First-party fraud: Also at 33%.
Sectors Most Affected by AI Fraud
Certain industries are experiencing higher rates of AI-driven fraud:
- Digital-only retailers: 62% targeted in Q1 2025.
- Retail banks: 48% reported incidents.
- Telecom providers: 44% affected.
SIM Swap Fraud: A Growing Threat
A notable trend in 2024 and 2025 is the explosive rise of SIM swap fraud, which increased by over 1,000% year-on-year. Nearly 3,000 cases were recorded, making it a significant risk for both consumers and businesses. In SIM swap attacks, criminals hijack victims’ mobile numbers to intercept SMS-based two-factor authentication (2FA) codes, enabling unauthorized access to bank accounts, payroll, and loan applications.
How Businesses Are Responding to AI Fraud
Recognizing the evolving threat landscape, UK businesses are ramping up their anti-fraud efforts:
- 68% plan to increase their fraud prevention budgets in 2025.
- 52% are investing in advanced AI analytics to detect and prevent fraud.
- 51% are developing new AI-driven models to improve customer decisioning and reduce false positives.
Strategic Priorities for Fraud Prevention
Businesses are aligning their investments to address the most urgent fraud risks:
- 60% are prioritizing first-party fraud detection and prevention.
- 58% are focused on combating synthetic identity fraud.
- 56% are targeting APP fraud mitigation.
Integration of Fraud and Compliance Teams
A clear trend is the merging of fraud and anti-money laundering (AML) functions. Around 60% of companies are creating unified FRAML (Fraud and AML) operations, while 65% are investing in onboarding-stage fraud detection to identify risks earlier and strengthen compliance.
Expert Commentary: The Dual Role of AI
Paul Weathersby, Chief Product Officer for Identity & Fraud at Experian UK&I, emphasizes that AI is transforming both the methods used by criminals and the tools available for defense. He notes that while fraudsters are leveraging deepfakes and voice cloning to deceive systems and individuals, businesses that invest in layered security, biometric checks, and smarter fraud detection technologies will be better positioned to protect their customers and stay ahead of emerging threats.