Tax season tactics: 3 tips for outpacing cross-industry fraud
Tax season is one of the most critical times of the year for both taxpayers and the IRS. With the IRS seeing billions of dollars lost to tax fraud, stringent measures are needed to ensure the tax filing environment is safe and secure.
One of the primary reasons for implementing a robust fraud intelligence ecosystem is to protect against identity theft and tax fraud. The digital nature of tax filing makes it vulnerable to various forms of fraud, including phishing scams and data breaches. Identity theft alone can lead to significant financial losses and delays in processing legitimate tax returns.
Given the fraud landscape during this 2025 tax season, firms must consider these key points:
1. Track fraud trends across industries and countries
During tax season, fraud often starts with tax refund fraud, where fraudsters file false tax returns to claim refunds. However, fraudulent activity doesn’t stop there. The illicit gains from tax refunds frequently move into other industries, particularly the payments space. For example, fraudsters may use the stolen funds to purchase prepaid cards, which are then used for further illegal activities or laundered through various channels.
This cross-industry movement of fraud can also have an impact in financial services and even iGaming space. This underscores the importance of a comprehensive fraud prevention strategy that spans multiple sectors. By accessing a cross-industry network, businesses can share intelligence and exponentially scale fraud protection efforts through a united front.
Additionally, fraud that starts in the US typically doesn’t always stay in the stay in the US. One of the most troubling developments found in our Global Fraud Report: 9th Edition is that fraud is organized, commercialized and does not respect borders. With 81% of European businesses believing cross-sector collaboration is key to stemming surging fraud, US tax fraud schemes are not just a US only issue.
Accessing a cross-industry network allows businesses to share intelligence and exponentially scaling fraud protection efforts through a united front.
2. Defend against AI-generated fraud
AI-generated fraud is a growing concern, as fraudsters use advanced technologies to create synthetic identities and carry out illegal activities. Executives identified AI-generated fraud as the most significant fraud trend over the next 3-5 years. With the rapid advancements in artificial intelligence, businesses benefit from innovation while facing increased security and fraud concerns.
Additionally, our fraud report found a rise of familiar types of fraud—such as synthetic identity fraud (SIF) and phishing—enabled by generative AI. For example, 74% of executives are worried that the technology will make phishing or smishing attacks more prevalent.
The key to fighting back can be in utilizing a single identity provider. A substantial 86% of executives emphasize the significance of having a singular vendor for identity verification and fraud protection to enhance customer experience.
3. Develop a fraud prevention ‘playbook’
As technology evolves, so do the tactics of fraudsters. Businesses must stay ahead of these threats by continuously updating their fraud prevention systems. Developing a dedicated fraud prevention strategy that takes a layered approach to identity verification is key.
A complete verification platform starts with a proactive fraud protection strategy and incorporates onboard intelligence that empowers businesses to streamline digital journeys and protect against global fraud threats. Building an advanced playbook can involve step-up authentication techniques like Document Authentication and Selfie ID Verification.
We’ve helped lenders, digital banks, insurers and sports betting platforms enhance their workflows to intelligently identify high risk transactions. We empower customers from a variety of different industries to prevent more fraud while quickly onboarding legitimate identities. Working with us can allow your business to take control of surging cross-industry fraud that is all too common during tax season.
Success in fraud prevention
Fraud has never been more prevalent. Rapidly evolving technologies and trends have resulted in an arms race between fraudsters and enterprises. Now more than ever, a robust and multi-faceted fraud protection strategy is critical. However, striking a balance between fraud prevention and a fast and convenient customer experience is challenging. Enterprises want intelligent onboarding to keep fraudulent transactions out without inadvertently turning away good customers while ensuring decision transparency for regulatory bodies.
By relying on a robust and layered verification platform, businesses gain a comprehensive understanding of identity during tax season. A comprehensive platform allows for easy configuration of verification workflows, protects against surging fraud and ensures customers move through an onboarding process without unnecessary friction.
Speak with a trust expert today to learn how we can help your business tackle surging fraud during tax season.