By Alanna Shuh
Fraud losses are escalating at a pace few financial institutions can afford to ignore. In 2025 alone, Americans reported $15.9 billion in fraud losses, up from $12.5 billion the year prior, according to the Federal Trade Commission. The latest LexisNexis Risk Solutions Cybercrime Report also identified an 8% increase in overall attack rates in 2025 compared to 2024, with variation across industries and channels. This rise reflects not only the growing scale of fraud but also its increasing complexity.
Today’s fraud threat is not limited to large national banks or global brands. Credit unions are clearly in the crosshairs. Fraudsters pursue any opportunity where they can access and move funds. Community-based institutions often present favorable conditions, including high-trust member relationships, expanding digital services and lean fraud teams.
Understanding how fraud is evolving, and what that evolution means for credit unions, is critical as leaders reassess and strengthen their fraud prevention strategies.
Key Trends to Monitor
There are a number of key fraud trends credit union leaders should monitor :
First-Party Fraud Is Now the Most Common Fraud Type
Globally, first-party fraud has become the most frequently reported fraud type. It occurs when a legitimate customer uses a real identity but intentionally misrepresents information or misuses access for financial gain. Within financial services, first-party fraud now accounts for more than 40% of reported cases and continues to grow year over year, according to the LexisNexis Global State of Fraud.
For credit unions, this type of fraud is particularly difficult to detect because the individual is an actual member with valid credentials. Traditional identity verification checks often succeed. Fraudsters may build trust over time by opening accounts, making timely payments and demonstrating responsible behavior before shifting to deceptive activity such as loan bust-outs, chargeback abuse or payment manipulation.
As a result, first-party fraud is often misclassified as a credit or collections issue rather than fraud.
This misclassification delays response, obscures exposure and increases losses. More importantly, it exposes a structural gap. Traditional verification answers whether an identity is real and whether an applicant is who they claim to be. First-party fraud introduces a more complex question: What is the likelihood that this individual will commit fraud over time?
Account Takeover Activity Is Rising Rapidly
New account opening remains the most targeted stage of the customer journey for good reason. It is the primary entry point to a financial institution, with roughly one in 11 new accounts flagged as high risk.
At the same time, fraudsters are shifting focus toward account takeover. High-risk account takeover activity rose 89% year over year in the most recent Cybercrime Report period. Third-party account takeover now represents nearly one-fifth of all reported fraud cases.
For credit unions, this shift carries significant operational impact. As more members rely on digital banking and self-service tools, compromised credentials, social engineering and session hijacking create increasing risk. These attacks place pressure across the organization, particularly within call centers and digital authentication, where institutions must balance security with member experience.
Synthetic Identity Fraud Is Accelerating Fastest
Synthetic identity fraud warrants particular attention among emerging threats. These identities are created by combining real and fabricated data, often blending legitimate personal information with artificial attributes or AI-generated documentation.
In 2024, synthetic identity fraud represented a relatively small share of reported activity. According to the Cybercrime Report, in 2025 that share expanded dramatically, increasing more than sevenfold. Generative AI, widespread access to compromised data and more advanced tools have created favorable conditions for rapid growth.
Synthetic identities are especially challenging for credit unions because they often appear low risk during onboarding. Applicants may be new to credit, lack established linkages and pass certain verification checks. Fraud typically surfaces only after fraudsters establish accounts or receive loans, resulting in delayed but significant losses.
For institutions expanding lending or digital services, synthetic identity fraud presents material balance sheet and reputational risk that requires dedicated detection capabilities.
Adapting Fraud Strategies Without Sacrificing Member Experience
Fraudsters now operate at scale and with coordination and patience, targeting institutions of all sizes. Credit unions cannot rely on static or uniform controls to address dynamic threats.
Effective fraud prevention must be layered and context-aware. Leading strategies assess risk across multiple dimensions, including identity confidence, behavioral patterns, activity velocity and changes over time rather than relying solely on static identity data. This approach enables institutions to introduce friction where risk is highest while preserving seamless experiences for trusted members.
Network-based risk intelligence is also increasingly important. Fraud rarely occurs in isolation. In fact, many fraudsters operate in networks with other fraudsters, complete with a chief operating officer and a finance team.
Patterns across devices, email addresses, locations and behaviors often emerge only when viewed across organizations. To fight a network takes a network housing collaborative risk intelligence. Consortium-driven insights can help credit unions identify threats earlier and reduce exposure to coordinated schemes.
Moving Forward
Fraud is no longer a contained operational issue. It is an enterprise-level risk that impacts onboarding, digital engagement, lending and member trust. For credit unions, the objective is not to eliminate friction but to apply it strategically, protecting both members and the institution without diminishing the trust that defines the credit union model.
As fraud continues to evolve, defense strategies must evolve in parallel. Trust remains a core strength, but sustaining it requires adaptive verification, layered controls and a deeper understanding of how fraud manifests in today’s environment.
Alanna Shuh is director of Fraud & Identity with LexisNexis Risk Solutions.
