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Viral Fraud: The Next Big Threat CUs Can’t Ignore
NEW YORK—Fraud isn’t just about the lone scammer anymore. It’s going viral.
That’s the warning from Kristin Carlson-Vinjamuri, senior data scientist at LexisNexis Risk Solutions, who says a new wave of attacks is targeting financial institutions through scale, speed, and social coordination.
“Fraud is no longer just about suspicious individual transactions. It’s becoming social and coordinated—playing out across networks, industries, and even countries,” Carlson-Vinjamuri told CUToday.info. “Most risk models that credit unions use were built to flag anomalies in their own siloed data, leaving blind spots that viral fraud exploits.”
What Is Viral Fraud?
Viral fraud is a coordinated scheme where fraudsters share attack methods online—often via social media—so thousands of followers can strike the same target at once.
Instead of a single fraudster testing a system, viral fraud could overwhelm a credit union’s defenses with a sudden surge of applications or transactions. Attacks on financial institutions show criminals could use a mix of real and stolen identities, swapping contact details to avoid easy detection.
“What looks like an unexpected spike in transaction volume could actually be the setup phase of a coordinated attack—one that goes undetected until the damage is done,” Carlson-Vinjamuri said.
Why It’s Growing Now
Carlson-Vinjamuri said several trends are converging to make viral fraud more common:
- Social media coordination: Fraud techniques spread instantly among networks of bad actors
- Blended fraud types: Traditional categories like “first-party” or “stolen” no longer capture the sophistication of these schemes, where fraudsters combine tactics
Carlson-Vinjamuri explained that in LexisNexis Risk Solutions’ data, cohorts of identities have been seen moving together across industries—applying for accounts at financial institutions, telecoms, and other companies within the same narrow time windows.
“That repeated, coordinated movement is the hallmark of viral fraud,” she said.
Why Credit Unions Should Worry
Many of the identities in a viral fraud attack share troubling risk factors: higher-than-average credit inquiries, past fraud associations, and even felony records. These risk factors should trigger red flags at the individual level. But the biggest hidden risk lies with the identities that don’t trigger individual red flags—instead, their coordinated activity with high-risk individuals is the hidden signal of a viral fraud attack.
For credit unions, Carlson-Vinjamuri explained, the danger is twofold:
- Blind spots in siloed data. Most credit union risk models only evaluate their own customer data, making it difficult to see broader patterns
- Operational overwhelm. Viral fraud creates sudden transaction spikes that look like normal product demand until the losses pile up
Detecting The Signals
Unlike traditional fraud, viral fraud isn’t easily caught by transaction monitoring alone. Instead, detection requires looking for groups of identities that appear together across time and place—patterns only visible through contributory or consortium data that spans industries.
“Without access to a vast contributory network, where organizations share risk insights with others on a reciprocal basis, financial institutions may misinterpret a volume spike as benign activity, when it’s actually a coordinated attack,” Carlson-Vinjamuri said.
Defending Against Viral Fraud
So, what should credit unions do? Carlson-Vinjamuri outlined several steps:
- Join consortium data networks. Sharing fraud intelligence across institutions helps expose patterns no single credit union could see on its own
- Layer fraud defenses. Relying on one type of detection model invites circumvention. Different models for digital and in-branch channels can close gaps
- Monitor after account opening. Accounts that look safe on day one can turn risky as fraudsters shift tactics. Ongoing monitoring is essential
- Focus on identity risk. Evaluate not just transaction anomalies, but also the background signals of applicants—credit activity, fraud history, and movement patterns
The Bottom Line
Viral fraud is growing because it takes advantage of exactly what credit unions pride themselves on: trust and accessibility. While many institutions are prepared for one-off fraud attempts, few are ready for attacks that arrive in waves of thousands, Carlson-Vinjamuri said.
“Credit unions can’t afford to assume a volume spike is just new demand,” Carlson-Vinjamuri said. “The institutions that succeed will be the ones that recognize viral fraud early, lean on contributory data, and build defenses that evolve as quickly as the fraudsters do.”
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