Fraud Warning Signs and How Heeding Them Prevents Larger Losses

Fraud rarely announces itself with one obvious event. It could start with a small, unfamiliar debit card charge, an urgent wire request, a spoofed call from the bank’s fraud department, or repeated failed ATM logins.

Those warnings may reach different teams or even a vendor. Without holistic visibility, that separation gives fraud room to grow into a more serious attack. To successfully battle these attacks, community banks and credit unions need one connected response across cards, payments, cybersecurity, operations, and frontline teams.

Uncovering the underlying pattern behind the losses helps financial institutions prevent future attacks. A card test, a phishing email, and a payment request can appear in different systems while belonging to the same attack. Teams need a way to connect those signals before individual small tests turn into a significantly larger loss.

The sooner the silos between teams break down, the better their chance of stopping the activity before the fraud web gets too tangled.

For a wider view of current fraud risks and regulatory expectations, download CSI’s white paper, The Fraud Hits Keep Coming from Every Direction.

Key Takeaways

• Fraud crosses channels. Controls for cards, checks, ACH, wires, ATMs, online banking, and social engineering need to reinforce one another.
• Small attempts deserve your attention. Low-dollar charges, failed logins, and unusual requests may be tests before a larger attack follows.
• Preparedness speeds up response times. Clear ownership, reporting deadlines, vendor responsibilities, and recovery steps reduce hesitation and drive faster results.
• Simple verification habits work well. Employees and account holders should know when to pause, use a known channel, and escalate. Build in continuous education on known risks.

Don’t Ignore Small Fraud Attempts—They’re a Test

Small fraud attempts often get written off as mistakes, but overlooking them can give cyberthieves a green flag for bolder actions. These small-dollar charges are known as card testing, when the holder of stolen card info makes small purchases—often $1 or less—to verify which cards still work. However, victims don’t need to have their card info deliberately stolen as a one-off hacking attempt to fall prey. Card testing can also occur as a targeted attack with software that uses automated attempts to find valid card credentials within the same bank identification number (BIN) range.

Payment processing company Stripe noticed an influx of small-dollar card fraud and tracked the trend from February to August in 2022. Data revealed a shocking 20 million card testing attempts blocked by Stripe Radar in a single day. That doesn’t account for attempts that took place outside of Stripe’s system.

These smaller fraud amounts add up quickly across thousands of accounts. Alloy’s 2026 State of Fraud Report found that 22% of financial institutions and fintechs lost over $5 million to fraud in 2025. Another 45% reported losses between $1.5 million and $5 million. Together, these numbers become significant.

Once the pattern appears, there are four steps to take in response:

1. Slow the attempts. Apply velocity checks and rate limits by user, IP address, device, or timeframe.
2. Confirm the pattern. Look for spikes in declines, $0 or low-dollar attempts, and repeated activity against one BIN range.
3. Contain the range. Temporarily limit affected BINs while your team investigates.
4. Reduce the next risk. Review predictable card-number patterns, give employees an escalation path, and ask account holders to report small unknown charges.

Visa recommends velocity controls and other measures that disrupt automated testing. Card controls work best when the resulting alerts are also visible to the teams monitoring fraud across other channels.

Draft Plans Before a Cyberattack Becomes a Payment Crisis

A cyberattack doesn’t stay confined to a specific system for long. Ransomware and phishing can expose credentials, interrupt access to systems, and pressure employees into approving fraudulent activity. Once that happens, wires, ACH transfers, cards, and digital banking can all be affected. That’s why payment response needs to be part of your plan from the start.

Make Ransomware Decisions in Advance

Ransomware locks up systems, blocking access to or encrypting data, often followed by a hefty payment demand. You don’t want to make those critical decisions under pressure and without time to consider all the implications. Be ready before an incident occurs by preparing your response in these four stages:

1. Prevent and detect. Patch systems, train employees, require multifactor authentication, segment networks, limit user access, and monitor systems and activities for threats.
2. Protect recovery. Keep backups offline and separate from production systems and test full restorations. The Cybersecurity & Infrastructure Security Agency (CISA) recommends offline, encrypted backups.
3. Make decisions early. Create a ransomware playbook that assigns roles and identifies who can authorize a payment—and a decision-making process for if a payment should be made at all. Any potential payment should also undergo legal review and an OFAC sanctions review.
4. Report on time. Banks generally have 36 hours to notify their primary federal regulator. Federally insured credit unions generally have up to 72 hours, and state rules may add other deadlines.

Spot Spear Phishing When It’s Built to Look Legitimate

Phishing messages try to persuade someone to share information or take an unsafe action. Spear phishing is more targeted. It may reference a real executive, vendor, payment process, or business relationship to make the request seem legitimate or routine.

When someone reports a suspicious message, here are four steps to take:

1. Isolating and resetting. Disconnect affected devices and change potentially compromised passwords.
2. Assessing and containing. Determine what the person opened, shared, or approved, and review security monitoring tools and logs for related activity.
3. Alerting the appropriate people. Notify IT and cybersecurity, then involve finance, legal, outside forensic specialists, and the cyber insurer as needed.
4. Closing the gap. Fix the weakness, run targeted simulations, strengthen email filtering and authentication, and verify payment changes through a separate channel.

Don’t investigate the message and the payment activity separately. A compromised email, changed vendor instructions, and an unusual transaction may all be part of the same incident, so don’t overlook the signals.

Protect Access to Cash and Digital Services

Fraud doesn’t always start with a payment request. Attackers may target the systems and devices account holders rely on to access their money.

ATM jackpotting uses malware or physical access to force a machine to dispense cash. Distributed denial-of-service (DDoS) attacks overwhelm websites or systems with traffic, making digital services unavailable. Both threats require technical controls and a practiced operational response:

• Protect the technology. Keep ATM software current, secure administrative credentials, require multifactor authentication, and monitor for unusual activity.
• Safeguard physical access. Protect ATM components with cameras, alarms, unique keys, and internal locks for added security.
• Prepare for disruption. Assign response roles, coordinate with ATM vendors and internet service providers, define notification and service expectations, and prepare account-holder communications in the event an attack takes place.

These incidents may look different, but the objective is the same: contain the disruption before it affects more systems and account holders.

Help Account Holders Break the Urgency Cycle

Technology controls alone can’t stop every scam from succeeding. Financial institutions also need a response for fraud that bypasses their systems and goes directly to the account holder. Social engineering targets fear and urgency, pushing account holders to act before they verify a request.

You can help your account holders by reinforcing these two simple habits:

• Do not respond to unsolicited messages. Wrong-number texts and unexpected investment pitches may be the start of a longer and costly scam. Account holders should block the sender rather than reply at all.
• Verify unexpected calls independently. Caller ID can make a scammer appear to be the financial institution’s fraud department. Account holders should hang up and call the number on the back of their debit card instead to determine authenticity.

Offering clear guidance and education to account holders gives them a practical way to interrupt or stop the attack before money leaves their account.

Build Resilience Across Every Channel

We’ve seen how fraud can disregard the lines between payments, cybersecurity, operations, vendors, and frontline teams. Be sure to craft your response so that it doesn’t depend on those lines either.

Whether the first warning is a card test, phishing message, failed ATM login, or unavailable digital service, your team needs to know its next steps to protect your institution and its customers. Build confidence through tools that increase their visibility across channels and give clarity on what occurred, who to alert, and how to contain and remediate the exposure quickly.

No financial institution will catch every attempt. Being prepared in advance with clear ownership, practiced response steps, and timely information will give teams a better chance to stop one incident before it spreads across systems or payment channels and becomes a much larger issue to contain.

See how CSI approaches fraud risks across payment channels in The Fraud Hits Keep Coming from Every Direction.

Download the white paper

Pankaj Sarda, SVP of Product Management for Enterprise Core Banking Solutions

Pankaj Sarda is the SVP of Product Management for Enterprise Core Banking Solutions at CSI. Pankaj leads CSI’s product vision, strategy, and execution for financial and technology products such as payments, fraud, financial crimes, and core banking solutions. His 20+ years of experience in product launches and operations management spans financial, healthcare, consumer, and automotive industries. Pankaj’s previous roles include leadership positions at Goldman Sachs and Capital One.