ST, PETERSBURG, Fla.–Velera has released a guide on consumer-engaged fraud it said is designed to educate credit unions on the many classifications of “one of the industry’s biggest drivers of fraud losses.”
According to Velera, through the guide it is helping credit unions understand consumer-engaged fraud patterns and their impact on financial institutions and merchants.
Velera said it identified the magnitude of consumer-engaged fraud through its Risk Solutions Collective Advisory, a group of credit union industry executives who partner with Velera on risk solutions by providing “invaluable insight into the frontlines of day-to-day fraud operations from their positions within their respective credit unions.”
The company said the objective of working with the advisory group is to further educate the industry on consumer-engaged fraud and provide resources to help detect and combat these scams with a standardized approach to case management.
Among Fastest-Growing Challenges
“Consumer-engaged fraud is among the fastest growing and most prevalent industry fraud challenges that credit unions are facing today, due in large part to its variety of different classifications – which make it difficult to define, identify and address,” Nicole Reyes, vice president of Risk Engagement, said in a statement. “Through our Risk Solutions Collective Advisory, Velera has been able to bring together some of the best minds in the industry to outline and detail the classifications and sub-classifications of consumer-engaged fraud so that we, as an industry, can better detect these scams and defend against them, ultimately protecting credit union assets while enhancing the member experience.”
Two Types of Fraud
Velera said it outlined two types of consumer-engaged fraud in its guide: misuse and persuaded.
“Misuse occurs when a transaction or engagement is made or initiated without outside influence by someone who does not have authorization to use an account and is subsequently reported as fraud,” the company said. “Persuaded is a transaction or engagement that is made or initiated with outside influence and allowed to be completed due to an authorized user of an account engaging with a third party that influences the completion of a transaction, which is then reported as fraud.”
Velera’s said its classification guide further defines both through sub-classifications that will enable credit unions to better understand the patterns and items for which to monitor behind the various fraud schemes.
‘Widespread Issue’
“Consumer-engaged fraud remains a widespread issue, often linked to financial challenges consumers experience like inflation, high credit card interest rates, and other economic factors,” Jeff Morris, vice president of Card Services with Nusenda Credit Union in Albuquerque, N.M., said in a statement. “The consumer-engaged fraud guide enables us to more effectively tackle these challenges by standardizing our approach to detect and combat this type of fraud and ultimately protect members’ finances.”