Neighbors Federal Credit Union is grappling with a surge in sophisticated fraud schemes, prompting the lender to adopt new fraud detection technology.

The Baton Rouge, La. -based credit union, has experienced an increase in fraud in the past year, Marc Walls, vice president of consumer lending, told Bank Automation News‘ sister publication Auto Finance News. 

“The rise in fraudulent activity has been noticeable, with more instances of fake or altered documents being submitted,” he said. “Additionally, we’ve observed a surge in multiple loan fraud, where individuals are attempting to secure loans from different lenders within a short period.” 

As a result, the credit union signed on to use Point Predictive’s  Auto Pass solution to detect and decline to fund loans with a high likelihood of being fraudulent, Walls said. 

The decision to add fraud– fighting tools comes as losses tied to gen AI-driven fraud across the financial services industry are projected to reach $40 billion by 2027, up from $12.3 billion in 2023, reflecting a 32% compound annual growth rate, according to the Deloitte Center for Financial Services.   

Additionally, the FBI issued a public warning on Dec. 3, 2024, highlighting gen AI’s role in enabling financial crime. 

Auto decisioning above 60%

Neighbors is ramping up fraud prevention as it improves its technology capabilities. The credit union has increased its automatic decisioning rate by 20% to 30% year over year and now approves 60% to 70% of auto loans automatically, Walls said. The lender plans to increase that rate to 80% this year, he said. 

“With auto-decisioning, we can approve a loan in just seconds,” Walls said. “If the loan needs to go to an underwriter, we aim to have a decision within five minutes.” 

Neighbors originated $238 million in auto loans in 2024, up 66.4% YoY, Walls said. The credit union projects auto originations to land between $144 million and $180 million in 2025, he said, noting that its auto book sat at $511 million at yearend 2024.  

Credit unions are targets

As more auto lenders began implementing back end and other services to fight fraud over the past few years, credit unions and other smaller lenders were increasingly targeted by fraudsters, Jessica Gonzalez, vice president of lending strategies at Informed.IQ, an AI-based lender solutions provider, told AFN.  

Credit unions have seen a significant volume of consumer loan fraud over the past decade, according to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury that collects financial transaction information and combats financial crimes.   

Credit unions reported 15,432 consumer loans as suspicious in 2023, marking a 418.9% surge over the past 10 years, according to FinCEN. 

“We’ve gotten to the point where everybody’s like, ‘If I don’t do something to stop fraud, they’re going to start coming after me,’” Gonzalez said.