Brazilian Banks Can Reduce Social Engineering Fraud. Here’s How

Brazil's digital banking boom has a dark side. Fraud losses are growing.

In 2024, Brazil's financial sector reported R$10.1 billion in fraud-related losses - a 17% rise from 2023. More than half (51%) of all Brazilians say they've personally experienced fraud. 

Now, as the new Pix refund mechanism (MED 2.0) is set to launch and new regulatory requirements take effect, banks urgently need to buck this trend and fight back against the most dangerous cause of Brazilian banking fraud - social engineering.

Roughly 70% of all fraud losses in Brazil are from social engineering scams.

In this article, we explain which types of social engineering are the most dangerous for Brazilian financial institutions and their customers, and how banks can shift from costly fraud detection to a more effective fraud prevention focus. 

Social Engineering Trends Brazilian Banks Need to Watch In 2026

While Brazil leads Latin America in digital payment innovation (Brazil is the world’s #2 real-time payments market), it has also become the starting point for new fraud tactics.

Our analysis of the global and Brazilian banking fraud landscape highlights two key fraud types likely to create the most risk to Brazilian banks in 2026: fast-moving Pix scams and AI-powered social engineering. 

1. Fast-Moving Pix Scams

“Fraudsters go where the money is, and unfortunately Pix is ​​the focus today,” said Luis Otávio Vissotto, Head of the Pix Security & Anti-Fraud Division.

Most Pix scams (and fraud in general) happen as a result of social engineering. In fact, roughly 70% of all bank fraud in Brazil is social engineering scams. These are schemes that trick victims into transferring money themselves. 

→ Banking fraud risks explained for 2026

The speed of these attacks is alarming. 

61% of scams are completed within 24 hours, leaving institutions and victims with very little time to intervene. By the time fraud detection systems flag suspicious activity, a victim’s money has often already moved through multiple accounts.

Fake calls or messages from bank support account for a significant portion of successful fraud attempts. 

Regional analysts now call APP scams the fastest-growing fraud type in LATAM as a whole, and Brazil sits at the epicenter of this crisis.

2. AI-powered social engineering (aka deepfakes)

Globally, deepfake-related incidents have surged by over 3,000% in the last year. As technology improves, Brazil will likely experience a similar rise in the next 12 months.

→ Learn more about the risk deepfakes create for your bank and how to stop them. 

Already, scammers in Brazil are known to hack social‑media accounts or clone WhatsApp to impersonate relatives and ask for urgent money. Silverguard’s “X‑ray of Pix scams 2024” found that among people over 60, the most common scams involve an impostor posing as a family member asking for money. 

This threat is compounded by misplaced confidence. Surveys show that while 69% of people globally believe they can recognize a scam, 43% still fell victim to one in the past year. As deepfake tools become cheaper and easier to use, these scams will become virtually indistinguishable from real interactions.

Unlike conventional phishing or social-engineering attempts, deepfakes use AI to mimic voice patterns, facial expressions, and even background noise, allowing criminals to impersonate trusted individuals in video calls or customer service interactions.

The fraud detection systems that most Brazilian banks and financial institutions use aren't designed to identify deepfakes. 

Consumers, too, remain unprepared. A convincing AI-generated video or voice message from a “bank representative” can easily bypass human intuition and established verification habits.

Why Traditional Banking Authentication Fails in Brazil

Traditional multi-factor authentication tries to stop fraud by adding friction: SMS codes, authenticator apps, and security questions.

While these methods slow down some attacks, they create three critical vulnerabilities in a mobile-first society like Brazil:

• Visible authentication trains users to expect interruptions. When customers are constantly asked to enter codes or answer security questions, distinguishing between real security checks and phishing attempts becomes more difficult. Criminals know this and can learn when to ask for codes, how to phrase requests, and how to seem legitimate.

• SMS and email codes can be intercepted or socially engineered. Fraudsters have learned to SIM swap or just coach victims through authentication steps, convincing them that entering their "security code" is part of resolving a supposed account problem. 

• Step-up authentication interrupts user flows. When banking happens through mobile devices, requests for 2FA codes or verifications can derail banking flows and make mobile banking awkward and annoying for customers. 

The fundamental problem with traditional MFA is that it treats authentication as a discrete event, i.e., something that happens at login or before high-risk transactions. 

Fraudsters can predict and hijack these events, and users quickly grow resentful of repeated interruptions.

The more authentication events financial service providers put in front of users, the more likely users are to become dissatisfied and annoyed by the service provider.

With Brazilian banking happening seamlessly and mobile first, authentication needs to evolve to match.

The R$ Cost of Signal-Based Fraud Detection

Brazilian banks typically rely on signal-based fraud detection systems designed to detect fraud after it happens. 

But the economics of this reactive model don’t work. For every R$ stolen, banks spend up to R$4.49 in response and recovery efforts. 

When they rely on signal-based fraud detection, banks face a hard choice: tighten security and increase false declines or reduce detections and accept higher fraud loss.

Linking Identity to Security 

Brazilian financial institutions can stop social engineering at its source by shifting from event-driven to continuous authentication.

This approach eliminates the predictable attack points that make social engineering possible.

• Traditional authentication interrupts sessions at certain (predictable) moments with code requests or verification prompts. 

• Continuous authentication operates silently and invisibly throughout the entire session, constantly confirming the user’s legitimacy without any friction.

With continuous authentication, even if a fraudster tricks a victim into “approving” a Pix transfer, the system immediately recognizes that the behavior or device signals don’t match the genuine account holder and automatically shuts down the session.

The transaction is blocked before money moves, not after.

For mobile account takeover attempts, continuous authentication monitors the user's identity, including behavioral and device signals, to ensure the user is legitimate.

It also provides strong protection against emerging threats like deepfakes, since a user’s verified identity, not just their appearance or credentials, determines whether a transaction can continue.

Identity, actions, and intent are all measured and monitored to prevent fraud.

Instead of checking identity at discrete moments, continuous authentication verifies the user across every interaction silently, invisibly, and without interruption.

Prevent Banking Fraud with Continuous Biometric Authentication

IronVest ActionID™: Invisible Security for Brazilian Banks

IronVest ActionID™ continuously authenticates users across all channels without a single user interruption. There are no SMS codes to intercept, no predictable authentication moments for fraudsters to script around, and no friction for legitimate customers.

With IronVest, banks can: 

• Stop social engineering at the source.

• Get evidence of user intent for disputes that get denied. 

• Defeat deepfakes automatically.

• Replace statistical fraud signals with continuous behavioral auth.

Schedule an IronVest demo today to learn more.