UK fraud surge hits record levels as Christmas approaches, watchdogs warn

Fraud levels across the United Kingdom have reached unprecedented heights as the Christmas shopping season approaches, with new research revealing a 9% surge in identity fraud over the past three years. The findings, published in a joint report by data analytics firm Experian and fraud prevention service Cifas, indicate that artificial intelligence is increasingly being deployed by criminals to create synthetic identities and execute sophisticated fraud schemes during the festive period.

The report comes as UK households prepare to spend more than £3,000 in December—29% higher than in a typical month—creating what investigators describe as a "perfect storm" for fraudsters targeting both consumers and businesses during peak commercial activity.

Background and Context

Identity fraud, where criminals use stolen personal information to apply for financial products without consent, has risen by 9.2% since 2022, according to Experian's analysis. What particularly concerns investigators is that AI-generated synthetic identities—combinations of real and fabricated information—now constitute 42% of all identity fraud cases, marking a fundamental shift in how criminals operate.

The festive period has historically been a prime time for fraudsters, with data showing card fraud rates consistently spiking in November and December. However, the scale of the problem has intensified, with potentially fraudulent savings account openings rising by 53% over the past three years, many involving AI-generated identities used to house stolen or laundered money.

Key Figures and Entities

According to Cifas, members recorded more than 217,000 fraudulent cases to the National Fraud Database in the first six months of 2025—the highest figure since records began. The economic impact is substantial, with identity fraud alone costing the UK economy an estimated £1.8 billion annually.

Account takeover fraud, where criminals gain access to victims' existing financial accounts, has seen particularly dramatic growth. Cifas members reported over 74,000 cases in 2024, representing a 76% increase compared to 2023. The first six months of 2025 have already recorded more than 38,000 additional cases, suggesting the trend is accelerating.

"Our work with Cifas underlines what many suspect, that UK businesses and consumers are facing an ongoing epidemic of fraud which shows no signs of abating," said Paul Weathersby, Chief Product Officer for Identity and Fraud at Experian UK&I, in the report. "Fortunately, businesses are deploying increasingly sophisticated technology to identify and prevent fraud."

Legal and Financial Mechanisms

The rise of AI technology has fundamentally altered the fraud landscape, enabling criminals to rapidly generate synthetic identities and produce convincing fake documents, including passports and driving licenses. These technological advances make fraudulent applications significantly harder to detect using traditional verification methods.

The report identifies eight primary fraud threats that businesses and consumers should monitor during the festive period: AI scams, identity fraud, account takeover, misuse of facility, investment scams, SIM-swap fraud, social media scams, and employee-targeted scams. Of particular concern is "misuse of facility," where legitimate account holders knowingly use their financial products for fraudulent purposes, which has become the second most common type of fraud recorded in the National Fraud Database.

"Fraud doesn't take a holiday—in fact, the festive season often fuels it," said Mike Haley, Chief Executive of Cifas. "As we unwrap Christmas fraud, increased spending, stretched resources, and seasonal staffing can create the perfect storm for criminals to exploit vulnerabilities at scale."

International Implications and Policy Response

The surge in AI-driven fraud represents a growing challenge for regulators and law enforcement agencies worldwide. The UK's experience mirrors global trends, as criminals increasingly exploit technological advances to circumvent traditional security measures across international borders.

Both Experian and Cifas emphasize the importance of data sharing and intelligence cooperation across sectors as a critical defense mechanism. According to the report, Experian has prevented more than £10.7 billion in fraudulent applications over the past five years, while Cifas helped its nearly 800 members avoid £2.1 billion in fraud losses during 2024 alone.

The findings highlight the need for enhanced regulatory frameworks to address AI-generated fraud, with experts calling for more sophisticated detection systems incorporating biometric and behavioral technology. As Haley noted, "sharing is our gift to businesses and their consumers—by sharing data and intelligence across sectors, we can close the gap and keep fraud firmly off the festive menu."

Sources

This report draws on the joint investigation "Unwrapping fraud: helping you to prepare for the festive season" published by Experian and Cifas in November 2024, including analysis from the National Fraud Database and internal fraud prevention metrics from both organizations. Additional context is drawn from UK retail spending patterns and previous research on AI-related fraud impacts on British businesses.