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Rising Threats of First-Party Fraud: A 2026 Outlook

Casap, an innovative agentic AI platform, has joined forces with Cornerstone Advisors to release a revealing report titled What's Going on in Fraud 2026. Conducted through an extensive survey involving over 400 bank and credit union executives, the findings underscore a worrying trend in the financial industry: first-party fraud is on the rise, and current fraud detection tools are struggling to keep up. This article delves into the key insights from the report, highlighting the urgent need for effective fraud prevention mechanisms and the promising role of AI in addressing these challenges.

Growing Complexity of First-Party Fraud

The report indicates that as of 2024, first-party fraud—a deceptive act performed by legitimate account holders—now constitutes a staggering 36% of all fraud cases reported, marked by a significant increase from just 15% the previous year. Unlike traditional third-party fraud that is perpetrated by external actors, first-party fraud infiltrates systems stealthily, leveraging the genuine identities of bank customers, rendering standard security measures ineffective at the point of login or transaction authorization. Instead, these fraudulent activities often only manifest weeks later during dispute operations, where financial institutions face an overwhelming burden.

A Distressing Trend in Fraud-Related Losses

Results from the survey revealed a bleak outlook as financial institutions reported an uptick in fraud-related losses for 2025, with nearly half confirming increased financial repercussions compared to the prior year. The anticipation of further losses in 2026 is palpable, with two-thirds of institutions bracing for even greater financial impact. This uptick is compounded by escalating concern among bank executives about consumer-related fraud, which has surged as a pressing issue, rising from 33% in 2024 to 46% as we move into 2026.

The Challenge of Identifying False Claims

In terms of the efficacy of existing fraud detection tools, the findings were equally concerning. Nearly 50% of bankers either reported insufficient knowledge or lack of tracking abilities regarding the percentage of false claims that their current systems can identify. Alarmingly, 25% of respondents acknowledged that their detection rates hovered below 20%. This lack of clarity underscores the inherent complexity associated with distinguishing fraudulent claims stemming from various causes—whether they stem from deliberate deceit, customer misunderstanding, or genuine financial hardship.

AI as the Solution: A Gap Remains

The report paints a picture of growing recognition about the potential of agentic AI among banking executives—75% view it as a viable solution for enhancing early fraud detection and identifying cross-case patterns. However, there remains a significant divide between this enthusiasm and actual implementation; 42% of institutions express discomfort with deploying AI, often rooted in a limited understanding of how it can be effectively harnessed to combat first-party fraud at scale.

In her poignant remarks, Shanthi Shanmugam, CEO and Co-founder of Casap, emphasized the urgency of tackling rising fraud losses. She noted that while trust is paramount, institutions must innovate and evolve their strategies to keep pace with changing consumer behaviors. The outdated tools many banks rely on are no longer sufficient to combat modern fraud tactics.

Cornerstone Advisors' Chief Research Officer, Ron Shevlin, echoed these sentiments, pointing out that societal shifts in consumer behavior indicate a call for a fundamentally different approach to fraud prevention—it's not merely a technological issue but a deeper transformation in how banks engage with their clients.

Designing a New Playbook for Fraud Prevention

As the landscape of fraud continues to evolve, Casap's collaboration with Cornerstone Advisors highlights the necessity for financial institutions to rethink their dispute operations comprehensively. This includes revamping every phase from claim intake to resolution. The proactive institutions that respond to these shifting dynamics will find themselves in a unique position to thrive amid increasing threats.

To explore the full details of the 2026 What's Going on in Fraud Report, visit Casap's website.

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About Casap

Casap is a pioneering AI-native platform designed to assist banks, credit unions, and fintechs in handling disputes and eliminating first-party fraud. By employing AI agents, Casap streamlines the entire dispute lifecycle, ensuring swift resolutions and reduced losses. Financial institutions leveraging Casap's innovative fraud scoring system have recorded over 51% declines in fraud losses within weeks, showcasing the platform's efficacy.

About Cornerstone Advisors

For over two decades, Cornerstone Advisors has provided critical insights and strategies that empower financial institutions to adapt and flourish in a competitive landscape. Their diverse experience encompasses all facets of banking innovation, from technology integration to performance optimization.