Velera Warns Credit Unions of ‘Consumer-Engaged’ Fraud
Credit union service organization Velera is sounding the alarm on “consumer-engaged” fraud.
The group on Monday (March 3) announced it had released a guide on this type of fraud to help educate the financial services industry.
“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 at Velera, said in a news release.
“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,” Reyes said.
The guide outlines two types of consumer-engaged fraud: misuse and persuaded. The former, Velera said, happens 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.”
Persuaded fraud happens when that transaction/engagement happens with outside influence “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,” the company said.
The guide also goes into sub-classifications to help credit unions better understand the patterns and items behind various fraud schemes that they need to look out for, the release added.
The news comes at a time when, as covered here last week, 30% of American consumers — roughly 77 million people — report having lost money to a scam in the past five years.
“This highlights the pervasiveness of these crimes, with most victims losing more than $500, and many experiencing even more significant financial losses,” that report said.
In other credit union news, PYMNTS spoke last week with Chris Corse, principal of emerging partnerships at Velera, about the changing landscape around FinTech and bank/credit union partnerships amid industry-wide pressures.
Interviewed for the “What’s Next in Payments” series discussing what it means to be a FinTech in 2025, Corse noted the macroeconomic uncertainty that’s triggered a “decline from the frothy valuations that we saw in 2021.”
Equity funding and dealmaking have been muted, leading investors to focus on “profitability and the overall financial health of the companies — versus prioritizing things like rapid user growth and user acquisition,” Corse told PYMNTS.
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