As fraud hits record levels, credit unions lead the fight
When Mary Franklin received what seemed like a routine call from PayPal, the caller told her there was fraudulent activity on her account and walked her through steps to give up access to her online banking. The fraudulent caller's real goal was to make it appear that a deposit had been made, then pressure her to withdraw cash and send it back via bitcoin or wire transfer.
Franklin did not follow those instructions. She called her credit union instead. On the other end of the line was Jessica Holliday, fraud director at Superior Credit Union in Lima, Ohio, someone who had seen this PayPal impersonation scheme many times before.
"Jessica makes me feel like she is the person I should call," Franklin said afterward. "(She’s) like a guardian angel!" That simple moment of trust captures something essential about how credit unions are approaching one of the most urgent threats in American financial services today.
As Fraud Prevention Month draws attention to the growing threat this March, the data make clear why the emphasis is warranted. U.S. financial institutions reported fraud losses of $12.5 billion in 2024, a 25% increase over the prior year, and the first half of 2025 alone produced $7.11 billion in additional losses, a 15% climb over the same period in 2024. Seven in 10 financial institutions reported major increases in fraud in 2025, driven by organized fraud rings and an 1,100% surge in the use of AI, deepfakes, and synthetic identities by criminal actors.
The threat mix is both wide and worsening. Account takeovers, check fraud, voice cloning, authorized push payment fraud, and remote access trojans are all escalating simultaneously. Credit unions specifically observed a 55% increase in remote-access trojan-enabled fraud in 2025, a category accounting for 15% of all credit union fraud, and barely on the radar two years ago. "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," said Ken Otsuka, senior consultant, Risk and Compliance Solutions at TruStage.
A layered response built on member relationships
Credit unions are responding on multiple fronts. Institutions like Citadel Credit Union in Greater Philadelphia have completely rebuilt their fraud operations around a blend of machine-driven detection, frontline staff expertise, and active law enforcement partnerships. Citadel's fraud investigations team refers cases annually to local, state, and federal agencies, including the FBI and the Secret Service, and played a key role in the June 2025 federal conviction of a ringleader behind a nationwide bank fraud conspiracy. The institution's internal data, case timelines, and documentation helped secure a judgment after a multi-week trial.
Technology is critical, but credit union leaders are emphatic that it cannot stand alone. Forty-three percent of credit unions cited fraud detection as their primary technology investment focus for 2024 and 2025, yet the institutions achieving the most consistent results pair those tools with the personal relationships that define the credit union model. A trained teller who senses something is off can start a conversation that stops a scam mid-transaction, a human-intervention layer that no algorithm can fully replicate.
In Colorado, Wings Credit Union (formerly Ent Credit Union) is actively supporting new state legislation that would allow financial institutions to pause suspicious transactions and protect vulnerable members from exploitation. LaShae Woodard, vice president of financial crimes at Wings, testified that while fraud victims span all age groups, seniors are frequently targeted because of accumulated retirement savings.
Regional collaboration is also expanding: 7 17 Credit Union in Warren, Ohio, brought together credit unions and law enforcement to compare notes on schemes ranging from gift-card fraud to cryptocurrency scams, while Superior Credit Union's community roundtable provided direct coaching from staff on recognizing red flags before money moves.
Calling for an all-of-government approach
Credit unions are not limiting their response to internal controls. Kate McKune, general counsel at Park Community Credit Union, testified this month before the House Financial Services Subcommittee on Financial Institutions on behalf of America's Credit Unions at a hearing that brought renewed urgency for Fraud Prevention Month. Her credit union processed nearly 6,500 fraud alerts in 2025, an average of nearly 20 per day, and absorbed more than $300,000 in fraud-related charge-offs in each of the past two years, even as its prevention efforts reached an all-time high.
"What is needed is a commitment at the federal level to work with financial institutions to help combat fraud and scams by using an all-of-government approach," McKune told lawmakers, calling for expanded information-sharing protections, regulatory modernization, and a national consumer education campaign.
That congressional appearance was not an isolated moment. In September 2025, America's Credit Unions also represented the financial services sector on a Government Accountability Office panel on federal cybersecurity regulations, part of an ongoing GAO series examining how overlapping and inconsistent federal requirements affect critical infrastructure industries.
The GAO panel's findings echoed McKune's concerns, with industry participants broadly agreeing that duplicative compliance burdens divert resources away from the actual work of securing systems and protecting consumers — a challenge felt most acutely by smaller institutions with limited staff. The GAO published its report on those findings on March 5, 2026, the same day McKune delivered her testimony on Capitol Hill, a convergence of timing that underscores how urgently the broader question of federal coordination on cyber and fraud policy is pressing on the financial services industry.
America's Credit Unions supports the bipartisan Taskforce for Recognizing and Averting Payment Scams (TRAPS) Act, which would establish a Treasury task force to study payment scam trends and develop coordinated countermeasures across federal agencies.
Strength in numbers
The cooperative spirit at the heart of the credit union movement is also shaping how institutions approach AI. During National Consumer Protection Week in early March, a cohort of credit unions, including InTouch Credit Union, Lake Trust Credit Union, ORNL Federal Credit Union, and Altra Federal Credit Union, launched the National Member Protection Initiative, a first-of-its-kind collaborative program designed to bring AI-driven fraud prevention directly into the member experience.
"Scams are one of the fastest-growing threats facing credit union members, and the industry can't afford to stand still," said Nick Evens, president and CEO of Curql Collective, the credit union investment collective backing the effort. The initiative reflects the broader credit union instinct to solve shared problems together rather than compete in isolation.
Credit union professionals can access fraud prevention resources, advocacy tools, and staff training materials through America's Credit Unions fraud resources page. Members can explore current scam warnings and fraud protection guidance through the NCUA's fraud prevention resources.
Get ahead of the threats reshaping fraud prevention at Fraud & Security Virtual Conference 2026, happening December 1–3.
