A Credit Union’s Five-Point Anti-Fraud Strategy Pays Off

Need to Know:

• Seven out of ten financial institutions are seeing major increases in financial fraud. Citadel Credit Union is attacking the problem with a combination of AI, trained staff and law enforcement allies.
• Citadel’s key fraud metrics have been falling as it continues to beef up its anti-fraud program.
• Citadel’s chief risk officer shares the outline of its efforts and practical tips for progress.

At Citadel Credit Union, protecting our members’ financial security means staying several steps ahead of increasingly sophisticated fraud schemes. Traditional defenses like voice verification, two-factor authentication, even the most complex passwords, no longer suffice to stop criminals. They adapt faster than ever.

Our efforts have resulted in material anti-fraud improvement over the past 15 months:

• Card fraud losses: Down 42% from peak in August 2024
• Non-card charge-offs: Down 72% from peak
• Average loss per non-card incident: Down 62% from peak
• Non-card fraud volume: Down 30% from peak

(“Non-card” includes such items as automated clearinghouse transactions, check deposits, and wire transfers.)

The stakes are rising across the industry. A 2025 study by Alloy found that 70% of institutions have reported major increases in fraud, with organized fraud rings being held responsible for a majority of fraud attempts. Nearly a third of financial organizations reported direct losses of over $1 million, an increase from 2024 where it was a quarter of institutions. There has been an increase of 1,100% in fraudsters using AI, deepfakes, and synthetic identities to commit fraud.

That reality drove Citadel, which serves members across the Greater Philadelphia region, to completely realign our fraud operations.

By blending machine-driven detection, human expertise, and active law enforcement collaboration, we’re not just reducing fraud losses, we’re working to eliminate the opportunity for fraud altogether. What’s emerged is a repeatable model:

• Systems that surface suspicious patterns earlier.
• Staff trained to respond with urgency.
• Investigators who treat each case as a link in a broader network of threats.

Over the past year, this structure has helped us reduce credit and debit card losses by 42%, and slash average non-card fraud losses by 62%.

The progress we’ve made represents a foundation for what comes next.

Lesson 1: Applying Intelligence Over Intuition

Fraud is a moving target, but it rarely starts at random. Most schemes leave behind clues such as subtle data inconsistencies, irregular behavioral patterns, or unusual device activity.

To combat this, our organization has adopted a suite of advanced tools designed to prevent fraud proactively, not just reactively. These include:

• AI-driven models that detect abnormal transaction activity in real time.
• Machine-learning algorithms trained on historical spending trends and behavioral patterns.

Alerts now trigger on more nuanced data points, complex enough to spot fraud that previously would have gone undetected.

Practical Tip: Other banks and credit unions can start small by monitoring device-level behavior (such as multiple account logins from a single device) before moving into full AI-driven modeling. Fraudsters are using the same phone or device to commit fraud on multiple accounts, many times in different time zones and also using various IPs. This indicates ring activity being initiated in foreign countries. Institutions can look for patterns such as this to implement advanced defenses.

Some credit unions have also layered biometric authentication and behavioral analytics into account access systems, adding security without slowing down legitimate users. Automated decisioning helps accelerate fraud detection at scale, while transaction-level analysis flags spending anomalies that merit deeper investigation.

Tap customer and member input: Citadel reviews member complaints as part of an iterative process to refine fraud controls and adapt to emerging tactics.

We have learned that scams have increased by over 50%, with members sharing with fraudsters their one time passcode (OTP). This is the leading driver for mobile wallet driven fraud. This is also the top cause of complaints.

Read more: Four Ways Banks Can Turn Fraud Into a Loyalty Play