Brand impersonation attacks are escalating rapidly, particularly targeting community banks and credit unions. According to original research in our SPOOF ’25 Brand Impersonation Threat Reports, these attacks have surged 457% year-over-year for community and regional banks and 285% for credit unions.
That is a radical spike in attack volume, and no financial institution is safe. Fraudsters are shifting from targeting only the largest institutions to also attacking mid-tier and small institutions.
The goal is the same as it has always been – to facilitate account takeover fraud by deceiving customers into sharing login credentials. To better prepare against this threat, let’s review account takeover, its impact, and what financial institutions can do to respond.
Account Takeover Fraud vs. Identity Theft
Account takeover attacks are closely related to identity theft, but there is a clear distinction between them. It’s important to parse these terms so as to properly understand the threat.
Account takeover attack: A fraudster gains unauthorized access to a user account where they can extract resources by either moving funds or making fraudulent purchases.
Identity theft: A fraudster steals personally identifiable information and uses the data to access services and resources, such as opening new accounts or applying for credit cards.
Both account takeover and identity theft involve the stealing and abuse of an individual’s personal information, but the scope is different. Account takeover focuses on exploiting the specific user account while identity theft often results in a broader abuse of the target’s identity across multiple domains.
What’s the Impact of Account Takeover Fraud?
Account takeover attacks inflict tremendous damage to financial institutions, imposing direct and indirect costs, increasing operational friction, creating legal and regulatory complications, and hindering growth. Account takeover undermines the aspects of the business that are most critical to success.
According to Aberdeen Strategy & Research’s conservative estimates, credit unions could suffer an 11% revenue loss while community and regional banks could face a 7.5% reduction. To put this in perspective, a credit union with $1B in assets under management (AUM) could be missing $363,000 in lost revenue every year.
Financial Costs
Account takeover leads to direct financial losses through fraudulent credit accounts, fraudulent loan applications, transferring funds out of the account, and unauthorized purchases. This creates significant financial damages for the account holder and for the financial institution, which may be required to reimburse the stolen funds. Whether or not the institution is liable often depends on how quickly the consumer reports the fraud.
Operational Friction
Security incidents raise operational costs through fraud remediation, account recovery, customer support, breach investigation, and dispute resolution. When a customer falls victim or is fearful they may have, call volume and time spent with customer service increases.
These surges strain call center resources and increase wait times, contributing to customer dissatisfaction and higher operational costs. Following an attack, institutions may suspend accounts or reset credentials, further degrading the customer or member experience.
Barriers to Growth
Financial institutions have invested heavily in digitizing their services to attract and retain customers or members, especially digital-first users who expect seamless, secure online experiences. But a poor digital experience, such as a fraud incident, shatters trust and undermines that investment.
Trust and growth are linked. As fraud incidents degrade the user experience, they cast doubt on the organization’s ability to protect assets which ultimately makes it harder to win over new customers or members. To stay relevant with a younger generation of digital-first consumers, credit unions and community and regional banks must deliver a secure, outstanding digital experience.
Legal and Regulatory Complications
Regional and community banks as well as credit unions must abide by stringent regulations around data protection and fraud prevention. The Gramm-Leach-Bliley Act (GLBA) section 501(b), requires financial institutions “ to (1) ensure the security and confidentiality of customer records and information; (2) to protect against any anticipated threats or hazards to the security or integrity of such records; and (3) to protect against unauthorized access to or use of such records or information which could result in substantial harm or inconvenience to any customer.”
Failing to protect customer and member data can expose a financial institution to fines, lawsuits, and heightened regulatory scrutiny.
What Is Causing the Spike in Phishing-Driven Account Takeover?
The rise in brand impersonation attacks is the result of two changes to the threat landscape:
Generative AI
Generative AI makes fraud cheaper, easier to execute, and more challenging to detect.
Fraudsters can use natural language processing to create content for phishing emails, spoof websites, and spoofed social profiles in seconds. Meanwhile, AI image generators mimic the branding of a target bank or populate a spoofed website with realistic imagery. The creative content for a brand once required significant time, resources and skills to craft. Now, it’s nearly effortless and instant.
AI also makes phishing emails harder to detect. Historically, cybersecurity training instructed users to look for misspellings, grammatical mistakes, and odd phrasing to identify phishing emails. Generative AI upends this dynamic with concise copy that sounds natural to native speakers.
Surge in Phishing Kits and Phishing Nests
A phishing kit is a tool sold by one fraudster to the next that helps create and launch phishing schemes. These “scams-in-a-box” come with pre-made templates that mimic real financial institution websites, complete with login fields, graphics, and code.
In our SPOOF ’25 reports for community and regional banks and credit unions, we identified a clear surge in phishing kits as well as what we have dubbed “phishing nests.” Phishing nests are built using phishing kits and consist of a single domain with multiple directories or pages impersonating multiple financial institutions.
Common Patterns of Phishing Nests
- Top-level domains: The use of similar top-level domains (TLDs) – particularly .icu but also .support, .tech, .cloud, .online, and others (including .com).
- Exposed index: Sometimes, the leading directory of a website is left open. Subdirectories may show the targeted financial institution’s name, nickname, or acronym. They might also display random text.
- Hosted .zip files: The subdirectories contain similarly named .zip files containing the code for a particular phishing page.
The key takeaway: phishing has never been easier to execute, and we are seeing a rise in the volume of attacks as a result.
How to Respond: Stop Phishing Before it Leads to ATO
Preventing account takeover starts with disrupting the phishing attacks that set it in motion. While tools like multi-factor authentication help secure access, stopping impersonation campaigns before they reach customers is the most effective first line of defense.
Extend Your Team with an Online Brand Protection Partner
Allure Security helps you stay ahead of impersonation threats by detecting and removing malicious content before it reaches your customers or members. Our AI-powered platform uses computer vision to scan the open web and the dark web for malicious websites, mobile apps, and social media accounts that other solutions often miss. Once threats are identified, our expert takedown team acts quickly to remove them.
Online brand protection services are a vital resource in the fight against phishing and account takeover. Many teams, whether focused on security, fraud prevention, or brand integrity, face more threats than they have time or resources to manage. By partnering with a specialized service provider, you can extend your capabilities and respond faster without the overhead of building and managing a specialized internal team.
Adapt Cybersecurity Training Programs
Cybersecurity and fraud teams must adapt education programs to teach customers, members, and internal staff to exercise greater scrutiny. Without glaring typos to raise suspicions in the reader, training should emphasize other strategies to identify a phishing attack, including:
- Carefully review the sender’s email address to see if it is an appropriate sender.
- Any message demanding an immediate reaction to a crisis should elicit careful review.
- Though not possible on mobile devices, hover cursors over links before clicking; this will generate a preview window showing the link location.
- Confirm the request’s legitimacy through a different channel (i.e., phone, email, etc.).
Get the SPOOF ’25 Brand Impersonation Threat Report
The cyber threats facing your financial institution are always advancing. For every new security strategy implemented, there is a fraudster devising a way around it. Today, generative AI and phishing kits are spiking the number of brand impersonation attacks and targeting financial institutions of all sizes. It’s not a matter of if your organization will be targeted but a matter of when and how often.
Download our SPOOF ’25 reports for credit unions and community and regional banks for a deeper dive into the new attack data as well as insights into the evolving attack strategies of fraudsters.
Get an update on:
- Which platform accounts for 88% of social media spoofs.
- How registrar policies are increasing scam resurrection risk.
- How fraudsters are using anti-bot technology to their advantage.
FAQs
What other methods are used by fraudsters to accomplish ATO?
ATO attacks often begin with phishing, but there are five other techniques fraudsters commonly use to hijack accounts:
- Credential stuffing: If a fraudster acquires a user’s password and username on another domain through a data breach, they may attempt credential stuffing attacks in the hopes of gaining entry to a user’s account. Credential stuffing attacks automate the injection of stolen username-password pairs onto login pages. If the user reuses their passwords, the fraudster can gain entry somewhere.
- SIM Card Swapping: This strategy shares resemblance to other phishing and identity theft techniques. The goal is to convince a mobile carrier to transfer the target’s number and information to a SIM card in the fraudster’s possession. If successful, any one-time password (OTP) text message sent as part of a two-factor authentication challenge would be directed to the attacker’s SIM rather than the user’s legitimate device.
- Malware: Malicious software, such as keyloggers, can be installed onto the user’s device through a variety of means. The malware can then collect the login information for use in an account takeover attack.
- Adversary-in-the-Middle Attacks: In these attacks, a fraudster intercepts communications between the organization and the user. Either through malware or unprotected networks, the strategy is to collect the OTP as it is sent to the user’s phone and use that information to gain access to the account.
What are some strategies to detect account takeover fraud?
To detect and prevent account takeover attacks in motion, cybersecurity professionals can leverage a fraud detection system. These solutions use rule-based engines and machine learning to analyze account behavior and flag suspicious activity that could indicate account takeover, including:
- Rapid login attempts
- Geolocation irregularities
- Multiple accounts changing information to share details
- Multiple accounts accessed on the same device
Fraud detection systems are imperfect, however. If improperly calibrated they may miss attack patterns or flood the team with false positives. These tools should be used in conjunction with other fraud prevention strategies to ensure the highest level of protection.
How can MFA help prevent account takeover fraud?
Multifactor authentication helps prevent account takeover fraud by strengthening the authentication challenge before a user can access the account. With multi-factor authentication, a user must be able to provide two of the three factors of authentication: something you know, something you have, or something you are.
Mobile banking apps can be configured to require a combination of login credentials, one-time passwords, and biometric challenges, such as fingerprints or facial scans, before entry into the account. This means that even if a fraudster were to successfully acquire the user’s login credentials and intercept an OTP, they would still be unable to pass the biometric challenge. This further ensures that only the legitimate user can access the account.
Though a strong security best practice, it is important to mention that MFA is not foolproof and can be bypassed with sophisticated fraud techniques. Furthermore, authentication impacts the user experience. Placing too many or overly difficult authentication challenges creates friction and lowers engagement.
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