Bah humbug! Christmas fraud risks to watch out for in 2026

Scary isn’t it, after a fantastic warm summer, and with 2026 drawing to a close, we now start to look forward to a relaxing festive break, Bah humbug! The Christmas period presents an elevated fraud risk environment driven by increased claims and transaction volumes, seasonal purchasing activity, winter weather events, travel demand, and heightened financial pressures on consumers. At the same time, fraudsters seek to exploit peak operational workloads, creating opportunities for both opportunistic and organised fraud.

The rise of festive fraud: Key threats to watch

The key fraud risks to monitor include account takeover (ATO), increased phishing, smishing, and credential surfing attacks target customer accounts to exploit stored payment methods, loyalty points, and personal information. This is traditionally a major seasonal threat.

Authorised push payment (APP) and social engineering scams, fraudsters leverage fake retailers, delivery notifications, marketplace listings, and urgent payment requests to trick customers into authorising transactions themselves. Parcel delivery and online shopping scams typically increase significantly during the festive season.

Card-not-present (CNP) fraud, the surge in e-commerce transactions creates more opportunity for stolen card credentials to be used fraudulently, particularly where merchants prioritise customer experience and speed over additional verification controls. Card fraud rates have historically spiked during November and December.

Synthetic identity and first-party fraud, economic pressures and increased seasonal spending can drive higher levels of synthetic identity fraud, mule account activity, and misuse of financial products. UK data indicates significant growth in AI-enabled synthetic identity fraud.

With gift card and loyalty program fraud, gift cards become a prime target during the holiday season, with fraudsters exploiting weaknesses in redemption processes, balance theft, and resale channels. Loyalty point theft also tends to increase.

Mule activity and money laundering, the combination of increased payments activity and temporary seasonal employment creates opportunities for mule recruitment and movement of illicit funds through newly opened or dormant accounts.

With AI-Enabled fraud, fraudsters are increasingly using AI to create convincing fake identities, forged documents, phishing messages, and social engineering attacks at scale. This remains one of the fastest growing threats entering the festive period.

Cross sector recommendations, as transaction volumes increase during the Christmas trading period, so should fraud concerns irrespective of which sector we work in, fraudsters are not sector agnostic and will target multiple lines of business across all sectors. The growing use of AI by threat actors continues to elevate both the scale and sophistication of attacks. Maintaining robust anti-fraud controls whilst remaining vigilant will mitigate potential risks.

Key risks for insurers

For insurers, the Christmas period brings a distinct shift in fraud exposure. Increased claims volumes, winter weather, travel activity, and financial pressures can drive both opportunistic and organised fraud. 

For exaggerated and opportunistic property claims, the festive period sees higher-value household contents in homes due to gifts, electronics, jewellery, and other seasonal purchases. Fraud risks include inflated theft and burglary claims, undeclared high-value items added after a loss, exaggerated contents valuations, and claims for pre-existing damage presented as new losses.

Turning to motor fraud, winter driving conditions and increased road usage heighten claims activity, creating opportunities for staged collisions, exaggerated injury claims, induced accidents, inflated repair and credit hire costs, and multiple claims arising from genuine incidents.

Escape of water and weather-related fraud as severe weather risks increase, insurers often see, misrepresentation of the cause or timing of damage, exaggeration of repair costs, claims for pre-existing maintenance issues presented as storm related events.

Travel Insurance fraud with higher volumes of seasonal holiday travel are subject to false cancellation claims, exaggerated baggage losses, fraudulent medical expense claims, and claims supported by altered documentation.

First party fraud driven by financial and cost of living pressures can increase, deliberate damage claims, concealment of policy breaches, false theft reports, and non-disclosure at application and renewal.