Fraud Growing More Sophisticated, Forcing Credit Unions to Rethink Defenses, Report Finds
By CU Today Staff —
NEW YORK--Fraud is becoming more coordinated, more sophisticated and increasingly difficult for credit unions to detect, forcing many institutions to move beyond traditional security systems that examine individual transactions in isolation, according to a new PYMNTS Intelligence report produced in collaboration with Velera.
The report, Defending the Member: How Credit Unions Are Responding to a New Fraud Landscape, said criminals are no longer targeting a single payment channel or vulnerability. Instead, they are linking attacks across account opening, authentication and payment activity, creating threats that span multiple systems and are often missed by disconnected fraud detection tools.
The research underscores how widespread the challenge has become. According to the report, 77% of credit unions experienced unauthorized network access during the past year, while digital banking growth has expanded the number of channels fraudsters can exploit.
The report also found that protecting members has become a competitive issue as well as a security priority. Some 82% of credit union members said the security of a payment method is the primary factor influencing which option they choose, highlighting the close connection between fraud prevention and member trust.
PYMNTS Intelligence and Velera said many legacy fraud programs continue to rely on separate systems for card operations, digital banking, authentication and core processing. Those data silos can prevent institutions from recognizing that seemingly unrelated events are actually part of the same coordinated attack.
To address that gap, the report said many credit unions are turning to integrated fraud strategies that combine real-time data with artificial intelligence to analyze activity across multiple channels. Rather than evaluating transactions one at a time, those systems look for broader behavioral patterns that can identify suspicious activity earlier in the fraud cycle.
Artificial intelligence is becoming increasingly important as fraudsters deploy AI-generated identity fraud, synthetic identities and sophisticated impersonation schemes that can closely mimic legitimate member behavior, the report said. AI-driven analytics can help institutions prioritize high-risk events, reduce false positives and speed investigations while allowing staff to focus on cases requiring human judgment.
The report concludes that collaboration will play a growing role in the industry's response. Because many credit unions lack the resources to build advanced fraud detection capabilities on their own, PYMNTS Intelligence said shared technology platforms and ecosystem partnerships can provide access to broader data sets, specialized expertise and continually updated analytics that strengthen fraud defenses across the credit union system.
Originally reported by CU Today.