As we arrive in 2025, we are once again confronted with new levels of ingenuity when it comes to fraud, fueled by advancements in technology, increased spending, and increasingly sophisticated criminals. But security continues to advance, too—and it’s an exciting time for innovation in fraud-fighting strategies and technology as you work to protect your portfolios and consumers.
Here are some of the top fraud threats facing our industry for the new year:
- Consumer-engaged threats: Continued economic pressures and financial strain, together with more sophisticated and evolving payment behavior, will keep first-party fraud a top concern in 2025. It’s vital to appropriately label this type of fraud to identify and track this increasing problem, as regulations shift liabilities away from consumers to create more strain on financial institutions.
- Biometric breaches: As biometric security becomes more common practice, it has emerged as the latest target in the sights of fraudsters. When biometric information is breached, fraudsters can more easily bypass traditional security measures—and when that information is exposed, it can snowball into further fraud attacks from multiple fronts.
- Digital payment fraud: Card Not Present (CNP) will continue to take the brunt of card fraud in 2025 as consumers increasingly make their purchases without physical engagement. Traditional online e-commerce merchants, as well as new types of digital providers and retailers, continue to push CNP volume—and tactics like SIM-swapping (where fraudsters take control of a consumer’s mobile number to intercept authentication codes) and exploiting vulnerabilities in mobile wallets are also on the rise.
- AI and ML usage in fraud perpetration: Artificial intelligence (AI) and machine learning (ML) have exploded on the fraud scene, with chatbots, voice clones and video fakes to spoof consumers out of their authentication information. AI can create and automate extremely convincing social engineering and phishing attacks, with realistic audio and video that can impersonate family, friends or co-workers.
All pretty scary stuff! However, we can—and should—take action to protect against these threats. Here are a few key ways that you can protect your credit union and your members:
- Communicate: Engage in reciprocal knowledge sharing internally and externally. Keep your front-line staff informed and properly educated on the latest developments in the fraud landscape. Communicate with trusted partners to build more informed risk intelligence; consortium data sharing can be powerful for identifying and understanding emerging fraud trends.
- Authenticate: As deepfakes and digital ID verification problems rise, it is critical to strengthen authentication by investing in security. Focus on AI and ML options to fit seamlessly into your onboarding and/or tokenization processes to ensure you know who is on the other end of your interaction.
- Automate: Fraudsters are using AI—and we can, too. AI can automate tasks so fraud fighters can focus on high-value activities. Automation can not only free up your people, but also streamline processes, reduce costs and improve operational efficiency. Consumers increasingly demand unique, swift experiences, and the use of AI can offer personalized analytics to predict member needs and proactively offer solutions.
- Cross pollinate: You can optimize your risk intelligence with metadata to identify precursor activities, such as suspicious authentication attempts, for more informed authorization decisioning.
Through collaboration, communication and automation, financial institutions can effectively share data among systems and solutions—and reduce the impact of fraud in the year ahead.