Fraud is Everyone's Fight

America’s Credit Unions advocates for stronger tools and policies to help credit unions fight fraud and protect members.

By Andrew Morris, Director of Innovation and Technology, America’s Credit Unions

Fraud is surging, and so is the damage it leaves behind—draining wallets, eroding trust, and putting consumers at risk. Reversing this trend requires a united front, from credit unions on the front lines to lawmakers and regulators shaping policy. There is a role for all of us in protecting our financial security.

Just a few weeks ago, leaders from the House Financial Services Committee wrote to the Federal Reserve to assess its ability to mitigate payments fraud and protect consumers.

The numbers aren’t promising: In a financial services survey last year, 79% of responding organizations indicated they were targets of actual or attempted fraud. Total fraud losses in the U.S. are estimated to be more than $138 billion in 2023, with $127 billion lost by financial institutions and $11 billion by consumers.

Enhanced tools to fight fraud and protect members are desperately needed in the face of rapidly developing and evolving technological challenges that didn’t exist when credit unions first started serving members. America’s Credit Unions is working diligently to secure those resources with the support of our league partners, members of our Fraud Task Force, and credit unions of all sizes. 

What we need from regulators
Financial institutions are often limited in their ability to target the root causes of fraud. Regulators must take a technology-forward, collaborative approach that empowers credit unions in taking additional steps.

To stop impersonators, improve early-warning capabilities, and aid consumer education, enhancing voluntary information sharing between financial institutions, regulators, and law enforcement is an important step.

The recent request for information from the Fed, Office of the Comptroller of the Currency, and FDIC on how to combat fraud is a good start, but as we wrote in our response, the NCUA and CFPB must be part of this process to account for every sector of the financial services industry.

Not only will this help develop better tools to attack fraudulent transactions before they occur, but also the needed rulemakings that affect multiple agencies. For example, the information-sharing safe harbor created by the PATRIOT Act is limited to specific transactions involving money laundering or terrorist financing, but not general payments fraud. That leaves a hole in protection efforts.

Agencies should maximize the scope of what’s permissible in sharing information to target general financial fraud, while providing limitations on liability to protect institutions operating under this framework.

What we need from legislators
There are several bills in front of Congress that would help tackle fraud. These include: 

• The bipartisan Taskforce for Recognizing and Averting Payment Scams (TRAPS) Act. It would establish a Treasury task force on payments scams and include both the NCUA and a credit union representative.
• The Financial Reporting Threshold Modernization Act would update Suspicious Activity Report (SAR)/Currency Transaction Report (CTR) thresholds for the first time since the Bank Secrecy Act was enacted in the 1970s, with automatic future adjustments for inflation.

More broadly, working together with regulators, Congress can update the PATRIOT Act safe harbor for better information sharing, and resist expanding fraud liability under the Electronic Funds Transfer Act.

Each one of these actions would better equip credit unions to fulfill their roles as the original consumer protectors in this increasingly digital age. Keeping members protected will always be a top credit union priority. While fraud is a rapidly growing issue, we can still make a difference by working together on solutions. Empowering credit unions to protect their members will go a long way to ensuring access to safe and affordable financial services.

America’s Credit Unions is the unified national voice for U.S. credit unions, advocating for policies that empower credit unions to help their 140 million members achieve financial well-being. Through advocacy, innovation, and community focus, ACU works to strengthen credit unions and the communities they serve.