In today’s ever-evolving digital landscape, safety and security have become heightened concerns for both financial institutions and consumers.
According to the latest Velera Eye on Payments report, 83% of credit union members express significant concerns about identity theft. This should not come as a surprise, as overall instances of fraud have been steadily increasing since 2021. According to the 2024 report, 10% of credit union members experienced identity theft in the past year, while 14% reported being victims of card fraud, with over 75% of these incidents occurring online. This is in addition to 50% of the U.S. population being targeted with a fraud scheme once a week last year, alongside seeing $1.03 trillion lost to fraud scams—leading to the largest transfer of wealth to scammers in history, according to the Global Anti-Scam Alliance.
As the digital payments ecosystem continues to evolve, the security protocols credit unions use must adapt along with them to keep their members safe. Here are some of the latest fraud trends that Velera is tracking—and ways to address them:
- Card not present (CNP) fraud: CNP fraud is expected to grow by 25% in 2025 due to data breaches, social engineering scams and bot attacks.
- Consumer-engaged persuaded fraud (i.e., social engineering scams): Ninety-eight percent (98%) of cyberattacks are carried out with social engineering scams, which have become even more sophisticated with deepfake integration.
- Synthetic ID fraud: In 2023, $1.8 billion was lost to synthetic ID fraud. AI is expected to proliferate synthetic ID fraud, especially in loans and opening accounts.
- Account take over (ATO): Account takeover continues to become more advanced with the use of AI and deepfakes. Instances of account takeover increased 24% from 2023 to 2024.
- Consumer-engaged misuse fraud (i.e., first-party fraud): Consumer-engaged misuse fraud is among the fastest growing and most prevalent methods of fraud facing the financial industry today. It’s difficult to define, identify and address, which is why Velera is aiming to tackle the topic in layers, starting with releasing its Consumer-Engaged Fraud Classification Guide.
- AI-generated fraud: ChatGPT, FraudGPT, machine learning and generative AI will continue to present a threat as their potential for fraud use increases and technology advances.
Enhancing security through strategy and innovation
The Nilson Report projects that global fraud losses could soar to nearly $400 billion by 2032. As the threats of fraud and the ways in which these schemes are carried out evolve, credit unions must implement proactive fraud detection and prevention strategies using the latest security innovations the industry provides, including:
- Real-time transaction monitoring: Leveraging data analytics and machine learning can help detect suspicious patterns and trigger alerts in real time, enabling credit unions to prevent fraud attacks before they occur.
- Multi-layered authentication: Credit unions should strengthen their security infrastructure by offering two-factor or biometric authentication for digital payments. Implementing these measures and card tokenization can enhance security, while providing a seamless payment experience.
- Continuous fraud education: Fraud tends to affect every generation differently, with the oldest—Boomers—being most vulnerable. Educating members on emerging scams through targeted outreach, such as TikTok videos for younger consumers or mailers for older generations, can empower those groups to identify and avoid threats of which they may not have otherwise been aware.
- Partnerships for security: Collaborating with fintech providers or credit union service organizations (CUSOs) can grant access to more advanced fraud prevention technologies and security expertise.
Digital payments: Security as a key differentiator
The growing concerns around fraud are also having a major influence on consumers’ payment choices and behaviors. According to Eye on Payments, 82% of credit union members select payment methods based on which option they perceive as most secure. This concern is influencing a preference for credit cards over debit cards for online transactions, due to enhanced security features such as fraud protection and chargeback capabilities. Mobile wallets, which offer tokenization, are also gaining traction as consumers seek safer payment alternatives to traditional methods.
To capitalize on these trends, credit unions should promote the security benefits of their payment products, highlighting key benefits and features like zero-liability fraud protection, instant transaction alerts and the safety of tokenized mobile payments.
The credit union advantage: Trust and security
One silver lining for credit unions is the high level of trust they have cultivated with their members. Velera’s Eye on Payments study found that 77% of credit union members reported being satisfied or very satisfied with how their credit union handled their fraud cases—compared to just 64% of non-credit union members. This highlights the superior member experience credit unions provide, whether during a negative or positive situation.
To maintain this trust, credit unions and other financial institutions should continue prioritizing responsive member service, offering rapid dispute resolutions and keeping members informed throughout the fraud mitigation process.
Ultimately, the credit unions that succeed will be those that prioritize security—not just as a protective measure, but as a core component of their value proposition. By doing so, they will enhance both member satisfaction and long-term loyalty in an increasingly digital financial world.
