Credit Unions pmiquel November 6, 2024

Understanding the Impact Of

Brand Impersonation on Credit Unions

Credit Union 3D Illustration
Stack of Allure Security Spoof '25 Reports
Open preview of Allure Security Spoof '25 Report
ALLURE SECURITY REPORT

SPOOF Report '25 for Credit Unions

Now in its third year, Allure Security’s SPOOF '25: Credit Unions highlights an alarming surge in online brand impersonation attacks on credit unions of all sizes. Drawing on three years of insights, the 2024 report reveals advancing fraud tactics and their significant financial and operational toll on credit unions. Evolving threat trends and their scale underscore the urgent need for proactive brand protection.

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%

Increase in Impersonations

%

Increase in Targeting

%

Increase in Impersonation of Businesses with $500M - $1B AUM

Many organizations fail to realize that online brand impersonation is more than a security problem.

Fraudsters increasingly target credit unions and their membership with online brand impersonation scams using phishing, smishing, vishing, spoofed mobile apps, and other techniques  – rising more than 200% over the past year according to Allure Security detection data. Account takeover, a result of online brand impersonation fraud, costs up to 11% of annual income according to Aberdeen Group.

Direct costs of financial account takeover include fraudulent account creation, transactions, and purchases – as well as investments in staff and technology to manage these incidents. Indirect costs add up as well including time spent by call center representatives investigating and resolving fraud, member churn, reduced member engagement, compliance fines and fees, heightened scrutiny from regulators, and reputational damage due to negative publicity, social media comments, and online reviews.

McKinsey & Company also reports that younger generations favor banks over credit unions, urging credit unions to improve their appeal to younger consumers to safeguard their financial futures. Reaching younger generations requires a strong, trusted presence on digital channels and high quality mobile and online banking experiences. Online brand impersonation erodes consumer trust in credit unions, deterring the opening of new accounts and discouraging the adoption of new digital services.

Online brand protection is an opportunity to both protect members and improve a credit union's bottom line.

Understanding Costs of Online Brand Impersonations

DIRECT

• Victim Account Loss
• Support Costs
• Takedown Costs
• Fraud Costs

INDIRECT

• Increased Customer Churn
• Reduced Loyalty/Satisfaction
• Decreased Digital Service Adoption 
• Increased Marketing/Acquisition Costs
• Loss of Employee Morale
• Opportunity Costs

Below illustrates understated, conservative estimates of the financial impact of online brand impersonation.

2.2% – 7.7%

Direct Account Takeover Impact

0.5% – 3.3%

Indirect Account Takeover Impact

2.7% – 11%

Total Account Takeover Impact

Assets, return on assets, and net income calculated using data from National Credit Union Administration (NCUA) quarterly summaries.

Financial Revenue Impact

Assets**

$500M

$1B

$10B

Return on Assets**

0.66%

0.71%

0.71%

Net Income**

$3.3M

$7.1M

$71M

ATO Impact on Revenue (Rounded)

$89-$363K

$192-$781K

$2-$8M

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