Viral Fraud: The Next Big Threat CUs Can’t Ignore / THE feature / CUToday.info

NEW YORK—The rise of coordinated fraud activities, referred to as “viral fraud,” is posing new challenges for financial institutions, according to Kristin Carlson-Vinjamuri, a senior data scientist at LexisNexis Risk Solutions. This trend involves groups of fraudsters sharing techniques online and collectively launching attacks on targets like credit unions.

Viral fraud differs from traditional scams by leveraging social media to enable large numbers of fraudsters to simultaneously target the same institution. This approach can lead to overwhelming spikes in transaction volumes that might go unnoticed until significant losses occur.

Factors contributing to the increase in viral fraud include:

• The rapid dissemination of fraud techniques via social media.
• The blending of traditional fraud categories, complicating detection efforts.

Carlson-Vinjamuri notes that many identities involved in these schemes exhibit significant risk factors, such as high credit inquiries and past fraud links. However, the challenge lies in detecting coordinated fraudulent activities through established risk models that rely on siloed data.

To mitigate the risks associated with viral fraud, financial institutions are advised to:

• Join networks for sharing fraud intelligence.
• Implement layered fraud detection systems.
• Monitor accounts continuously for emerging risks.
• Assess identity risk beyond just transaction anomalies.