How Credit Unions Can Reduce Call Spoofing & Fraud Problems

Consumers are very concerned about the increasing number of data breaches, imposter scams and fraud that have become a part of our everyday lives. But when fraud threatens their finances, they’re terrified. And they’re not the only ones.

Financial institutions themselves are under attack.

According to Security Magazine, financial institutions experienced a 53% year-over-year increase in fraudulent activity in Q4 2022. But it’s the smaller banks and credit unions that are being hit the hardest. In fact, the same report showed fraud rates in credit unions increased by over 70% in 2022.

Credit unions are especially at risk because they lack the data, operational resources, solutions and technologies that larger institutions have to prevent fraud. In addition, smaller financial institutions often enjoy more personal relationships with customers and members, and rely heavily on the phone channel for customer service. And bad actors often leverage call spoofing as part of a multichannel approach to commit fraud.

Out of desperation, in 2023 a number of associations and organizations, including the American Bankers Association and NAFCU (now America’s Credit Unions) submitted a letter to the Federal Communications Commission (FCC) petitioning for additional measures to combat illegal and spoofed calls and to reduce the number of legitimate calls that are mistakenly blocked as spam. They also requested that the FCC prohibit the display of data on the consumer’s caller ID if the call can’t be verified as authentic by the originator.

What they may not know is that the FCC has already taken many measures to reduce fraudulent activity, including mandating the implementation of STIR/SHAKEN call authentication and making AI-generated voice cloning in robocalls illegal in the U.S. In fact, according to Juniper Research, “North America has the greatest decline rate in robocalls, with the region forecast to decrease by 29% between 2024 and 2029, from 60 billion in 2024 to 42 billion in 2029. This is attributed to the trends seen globally, specifically with efforts from the FCC to reduce fraudulent robocalls.”

Significant progress can only be made if financial institutions also take action to complement and support regulations, like leveraging branded calling and spoofed call protection solutions and technologies that help them protect consumers and themselves.

Using the Right Tools in the Toolbox for Financial Institutions

Regulations alone won’t solve the problem. Just as bad actors are drawing from a variety of tools in their arsenal to commit fraud, financial institutions of all sizes need to do the same to cover their bases. Here are some tools small banks and credit unions can integrate:

• Use solutions that register enterprise phone numbers, reduce spam mis-tagging and blocking, and include DNO (do not originate) registries to ensure that calls from published inbound numbers can’t be spoofed. Such measures ensure legitimate calls really do get through and reduce the chances of having phone numbers spoofed.
• Implement a branded calling solution with two key features. First, it should allow for adding a name, logo, number and reason for the call to the mobile display. Second, it should leverage call authentication to ensure a call has not been spoofed. Such branded calling can help increase engagement, improve the customer/member experience and protect brand reputation.

The use of branded calling specifically to help reduce robocalls is very promising. Juniper Research forecasts that North America will account for 46% of branded calling authentication API calls in 2029. The region will see a 1,672% increase in the total number of branded calling authentication API calls between 2024 and 2029.

Avoid Missed Connections and a Tarnished Brand

Aside from fraud itself, even consumers’ fear of robocalls and fraud have had a negative impact on financial institutions and businesses. In fact, close to 90% of consumers just don’t pick up the phone. Our consumer survey showed 74% of respondents did not answer a call due to safety/fraud concerns only to learn later that it was a legitimate call. Further, 48% rarely or never answer the phone if they don’t know who’s calling. Consumers are avoiding fraud, but they’re also missing the critical calls they want and need to do business.

In addition, robocalls, call spoofing and fraud have a negative impact on a brand itself, causing a lack of trust in financial institutions. A Forrester Consulting study, commissioned by Neustar, a TransUnion company, shows customers who have high trust in a brand are much more likely to stay with that company (94%), while customers with low trust are much less likely (55%). That’s critical, especially for smaller entities, like credit unions and regional banks who rely on trust and personalized relationships.

Keeping up with fraudsters, who continue to find loopholes and workarounds to commit fraud, can feel like a full-time job to financial institutions. But the good news is that there are solutions available, like branded calling and spoofed call protection, that help you promote your business while protecting your brand and your members.

James Garvert is the SVP and General Manager of TransUnion’s TruContact Communications.