The bad actors behind financial fraud are getting smarter. But so are banks.
Banks across Western Massachusetts are finding new ways to root out attempted fraud amid a nationwide surge in scams, from AI-powered deepfakes to low-tech check fraud.
“AI has changed the game for fraudsters,” said Heather Arbour, vice president and fraud compliance manager at Monson Savings Bank, a community bank founded in 1872. “They can now create highly convincing emails, texts and even voice calls that mimic legitimate businesses or individuals.”
In an interview, Ben Wagoner, head of corporate security at Westfield Bank, ran through a list of types of fraud.
Phishing occurs when a consumer receives an email from someone masquerading as a bank, utility company or some other official entity. The email might include a link to a webpage, where users are asked to divulge sensitive information — like a Social Security number or a password — that can then be used by a thief to access bank funds.
Smishing is a variation of phishing done over text.
“In Mass., there was one going around for turnpike tolls, ‘Click on the link here … you’re overdue for (toll payments),’” he said.
Fraud victims might also get a call from a doctored caller ID in a scam known as vishing or spoofing. With AI, spoofing scams can now include highly realistic voice impersonations.
In 2024, reported losses nationally from phishing and spoofing scams topped $70 million, a nearly threefold increase from the 2023 total of $18.7 million, according to the latest report from the FBI’s Internet Crime Complaint Center.
Though local banks were hesitant to elaborate on losses they’ve suffered, they said beefing up security has been top of mind.
PeoplesBank, a large community bank with branches in Massachusetts and northern Connecticut, is shifting away from manual fraud detection toward more automated, machine-driven tactics, said Executive Vice President Aleda De Maria.
“We’ve been joking internally that we need to fight AI with AI,” she said.
The bank has been using ZYNLO, an app, as a sandbox where it can test security systems that will be introduced later this year, she said.
Among them: a system that leverages AI and machine logic to create a model of customers’ online banking behaviors. For example, should someone want to transfer funds to another account, deviations from the model trigger a review by a human being or, if the user does something brazen, a “hard block” by a bot.
The system can tell if a fraudster is at work by how much time they spend on the transaction history screen or which phone they’re using, she said.
“Just in the fourth quarter alone we saw a very significant reduction in account-to-account transfer fraud on (ZYNLO),” she said.
Westfield Bank has a similar system in place to detect anomalies, with a human being interpreting results and making a final decision, Wagoner said. Ditto with Monson Savings.
Alongside the spread of AI-powered fraud, check fraud continued to hassle local banks in 2025, reflecting national trends.
Fraudsters typically steal checks from mailboxes and use household chemicals to remove the recipient’s name and the amount, adding in their own, according to a joint report by the FBI and U.S. Postal Inspection Service.
In a more sophisticated scheme, fraudsters doctor photos of stolen checks with photo-editing software and attempt to cash the doctored checks.
Arbour said Monson Savings uses image-analysis technology to spot duplicate or altered checks. The bank also uses Positive Pay, an optional service that compares checks presented for payment against a database of checks obtained from the issuing parties.
Westfield Bank offers Positive Pay to business customers, said Senior Vice President Dan Marini.
In a similar strategy, PeoplesBank uses technology that ensures checks don’t have a routing number that was previously flagged as suspicious.
Local bankers stress that customer awareness is a critical component in any effective response to fraud. Monson Savings runs a detailed safety and security blog. At PeoplesBank, customers fill out a checklist designed to spot any red flags before committing to a wire transfer.
Wagoner said that if a customer is ever unsure of whether they’re talking to a bank representative, they should hang up the phone and call the number on the back of their bank card — or visit a local branch.
Though Monson Savings has seen a reduction in successful fraud attempts, Arbour said the battle is far from over.
“We’re proud of the progress,” she said, “but we know this is an ongoing battle that requires constant vigilance.”
