The ever-changing fraud landscape
"Never, in my 35 years with TruStage Risk Management, have I seen such high losses under so many different areas, all at the same time."—Ken Otsuka, Senior Consultant, Risk & Compliance Solutions at TruStage
Fraud trends
According to the Federal Trade Commission (FTC), U.S. consumers and businesses lost $7.11 billion by the end of the second quarter of 2025. That represents an increase of just over 15% compared to the first two quarters of 2024. Fraud losses have increased, even accounting for inflation, every year this decade. That trend is showing no sign of slowing down.
America's Credit Unions sat down with Ken Otsuka, Senior Consultant, Risk and Compliance Solutions at TruStage, to discuss the current fraud landscape, how it's changing, and what actions credit unions can take to stop fraudsters.
Otsuka noted the biggest areas of fraud losses for credit unions are coming from account takeovers, check fraud, interactive teller machines (ITM), and jackpotting—where fraudsters extract all the bills from ATMs. Regarding check fraud, he pointed to the increase in check fraud aligning with the increase in mail theft, which happened around the pandemic. Additionally, with jackpotting, fraudsters are using computer viruses to hack ATMs and get them to "dispense cash until the canisters are emptied."
For ITM fraud, Otsuka said they are targeting self-service features outside of business hours, mainly using counterfeit debit cards. "I recall one credit union had seven of their ten ITMs emptied in a matter of hours," he said.
Types of fraud
Account takeovers are an area of particular concern, as multiple credit unions have reported seven-figure fraud losses from account takeovers.
"And what's frustrating for credit unions is that it's all social engineering," said Otsuka.
Fraudsters are impersonating credit union employees and obtaining passwords, two-factor authentication codes, and more. While elder fraud has been an area of increased attention and resources, he mentioned he's not seeing fraudsters target specific members by demographics.
"They want to target as many members as possible," he said. "It's akin to throwing a huge fishing net into the ocean in hopes of capturing as many members as possible."
Otsuka believes that fraudsters are using automated tools to scale these social engineering operations and take over more accounts. "Right now, fraudsters are targeting the weakest link, the members," he said.
Credit unions can fight this fraud by educating their members about these scam tactics via direct mailers, posts on their websites, and any other methods they use to reach members.
AI's role in fraud
He also highlighted the double-edged sword that AI can, and has already, played in the fraud landscape. Fraudsters have been using AI to generate synthetic identities, or even for simple tasks, such as writing phishing e-mails. He pointed to deep fake technology, which can make anyone appear to do or say something they have not done or said, as an area of future concern because of how realistic they may appear.
How credit unions can tackle fraud
Otsuka believes credit unions can fight back, saying they need to "fight fire with fire by deploying a real-time fraud monitoring solution that leverages artificial intelligence and machine learning."
"The beauty of this type of solution is that it's constantly learning based on changing fraud patterns," he added.
Credit unions staying on top of fraud trends and constantly evaluating their risk mitigation strategies will be viewed as a trusted partner by credit union members.
For more resources on how credit unions are fighting fraud:
- Navy Federal Credit Union shares their approach to fraud prevention on the latest episode of A CU Seat at the Table.
- First Community Credit Union tracks the viral fraud pattern thanks to fraud networks.
- Armco Credit Union leverages their award-winning multi-channel fraud prevention program to educate their members.