3 minutes
3 Keys to Fighting Fraud
If your credit union doesn’t prioritize fraud prevention early on, you could end up in a constant state of playing catch-up with fraudsters. Learn how adopting a proactive, layered approach will help you stay ahead of evolving threats.
American consumers lost a record $10 billion to fraudsters in 2023, and with fraud losses continuing to escalate, the pressure for credit unions to protect both their members and their institutions is higher than ever.
Balancing security with the latest conveniences can be tricky. You want to offer your members the best digital experiences, but doing so often invites new risks. And if you’re too restrictive with the services you offer and the controls you put in place, you risk missing out on important engagement and growth opportunities with your members.
It’s disheartening, but not hopeless. You don’t need to shut everything down or become overly restrictive to manage fraud. You just need to adopt a smarter, more strategic approach.
Standardization Is Key
One of the biggest challenges in combating fraud is the lack of standardized fraud definitions and attack vectors across the industry. This inconsistency makes it difficult to collaborate effectively with other financial institutions. For example, if one institution defines a fraud attack differently than another, any attempt at sharing information becomes confusing and leads to subpar results.
A tool that aims to address this lack of standardization is the FraudClassifierSM model developed by the Federal Reserve and the Fraud Definitions Work Group. By setting and adhering to industry-wide definitions for various types of attack vectors, financial institutions can align their understanding of fraud, enable better collaboration, achieve clean reporting data, and create more effective defenses against fraud.
Proactivity Helps Build Stronger Defenses
In the world of fraud prevention, the mantra is always, "Be proactive, not reactive." Yet financial institutions often find themselves scrambling to respond to the latest trends rather than staying ahead of them.
Credit unions must invest in the future of fraud prevention now ‒ not just with technology, but with staffing, training, and resources. Taking a reactive approach leaves you vulnerable. A proactive stance, on the other hand, allows you to anticipate new fraud methods and build defenses before attacks become a problem.
A Layered Approach Works Best
No single tool can stop every type of fraud. That’s why a layered approach to fraud prevention is critical. Multiple points of contact and review help identify suspicious patterns and prevent fraud more effectively than relying on one solution alone.
Your credit union should focus on adaptive technologies that evolve alongside new fraud trends. Solutions leveraging AI, advanced analytics, and real-time data-sharing between institutions are incredibly powerful. These tools allow you to detect fraud before it happens, making prevention much more efficient.
Don’t Do It Alone
Creating an effective fraud strategy may seem daunting, but you don’t have to do it alone. Engaging industry experts and collaborating with partners inside and outside your credit union can help relieve some of the pressure—and help you find the tools and solutions that work best for your organization.
Learn how you can proactively combat financial crimes and fraud with help from the experts at Jack Henry™.
Sam Truitt, Senior Analyst, Financial Crimes at Jack Henry™ leads the Corporate Strategy team in all domain-related research. Her role is dedicated to analyzing the current market landscape, performing various industry research, and delivering thought leadership to enhance the financial crimes strategic direction within Jack Henry and beyond. With 10 years of experience, she has led operations at a prominent financial institution and continues to expand her expertise daily.
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