According to Javelin Research, more than 1 in 5 adult Americans have been a victim of account takeover (ATO) fraud.

ATO fraud—defined as unauthorized parties gaining access to an individual’s account or profile to commit financial theft—is growing, and it’s manifesting in new and concerning ways. The latest trends range from scam contact centers and criminals mimicking legitimate financial institutions, to deepfakes of members’ voices and facial images using AI.

For example, a call center based in India was recently busted for using leaked American Social Security numbers to target U.S. citizens. The scammers would call their targeted victims and pretend to be from the Social Security Administration. Then a second scammer would get on the phone posing as a U.S. Marshal, and request a transfer of cryptocurrency or gift cards in exchange for suspension of the Social Security number. As improbable as the scenario sounds, many innocent people were victimized, and the criminal enterprise collected an average of $48,000 per day for four months before being shut down.

In another common scheme, criminals impersonate bank or credit union employees and use spoofing technology to make it appear as if they are calling from the financial institution. The scammers coerce victims into providing their online banking credentials, debit card numbers and other confidential info before locking them out of their own account. One such scam succeeding in stealing $2 million from customers of a Pennsylvania financial institution before getting caught.

During Co-op’s recent FraudBuzz webinar, we surveyed attendees to see whether they are more concerned about ATO and identity scams this year than last. Nearly 80% of respondents said yes; combined with those that are as concerned as last year, and that number shoots up to nearly 98%.

Analysts expect ATO fraud to continue its rapid growth trajectory for several reasons. For one, digital adoption is steadily rising among consumers, retailers, and other businesses. Also, the increasing sophistication and availability of open-source AI technology is enabling “deepfakes” of human facial imagery and voices, making it much harder and more costly to detect the impersonation of legitimate accountholders. And if there’s one thing that law enforcement and security experts have learned in recent years, fraudsters are nothing if not patient, resilient and opportunistic. They are happy to play the long game, modifying their schemes to achieve maximum returns over time.

Protection Begins with Identification

Whether you interact with your members in-person, over the phone or through digital channels, protecting them from identity theft, fraud and financial loss should be among your credit union’s top priorities.

According to a 2021 FICO Digital Consumer Banking Fraud Survey, 83% of customers will register a complaint or even leave their financial institution if they are unsatisfied with how a fraud incident was handled. This reaction is justified, as individual scam and fraud victims suffered a median loss of $650 per incident in 2022, up from $500 in 2021.

To effectively protect members from account takeover fraud, credit unions need to employ a layered approach that begins with member identification and verification. One of the best ways to protect vulnerable member moments across the member journey is by investing in digital capabilities to properly authenticate members. IDCheck by Co-op is one such solution designed specifically for Co-op Contact Center interactions that uses a one-time passcode (OTP) sent via SMS, email or voice call based on the members’ preference.

The simple and streamlined 5-step process works like this:

1. The member calls the Co-op Contact Center agent.
2. The agent sends an OTP to the member’s device via SMS text, email or voice call.
3. The member verbally provides the OTP to the Contact Center agent.
4. The agent enters the OTP and verifies the code.
5. The Contact Center verifies the member’s identity, and assistance begins.

IDCheck also works well for in-person interactions, including at Co-op Shared Branch locations. In this scenario, credit union members enjoy a simple, streamlined member experience consisting of scanning a QR code with their mobile device, uploading their identification document and a self-portrait. Upon validation, the member will receive a unique OTP on their device and display the code to the teller to conduct their transaction.

Combining Technology with the Human Element to Combat Fraud

Effective ATO fraud loss prevention goes beyond identification and authentication, however. It demands a multi-pronged approach that includes both advanced cognitive technology like AI and machine learning and a human element.

Co-op Cooper Fraud Score is a dynamic, integrated, real-time machine learning score that helps credit unions react more quickly to fraud trends. Cooper Fraud Score supports credit unions’ bottom line by reducing false positive ratios, fraud chargebacks, and ultimately—fraud losses.

Cooper Fraud Score works behind the scenes to help credit unions enable a more frictionless and secure member experience, leveraging advance machine learning algorithms that automatically predict fraud with much greater speed and precision than processes involving traditional fraud rules and hands-on maintenance.

This frees up your fraud mitigation staff to work closely with Co-op’s experienced team of Fraud Prevention & Solutions Consultants and data scientists to build and customize a multifaceted fraud mitigation strategy. These strategies are designed to reinforce your front-line defenses, by focusing on high level trends and areas of concern that impact your unique member base.

Begin Implementing Your Layered Approach Today

As ATO attacks continue to grow and impact your members, credit unions need to implement sophisticated fraud prevention strategies to stay one step ahead of the criminals. For more insights on how to implement a layered approach to combatting payments fraud, download this white paper. Then contact your Co-op Fraud Prevention & Solutions Consultant today to begin building your technology-enabled strategy to protect your credit union and members from fraud.