Preventing fraud with Alloy: Best practices for credit unions
Oct 8, 2025
Credit unions are facing a difficult ask: to deliver a member-first experience while safeguarding against increasingly aggressive fraud tactics. Members expect fast, frictionless access to services once they’ve joined, but that openness can become a liability when fraudsters exploit it.
In recent years, fraud attacks have grown bolder. Bad actors don’t just target digital channels; they walk into branches, confident they can bypass controls by taking advantage of the trust and hospitality credit unions are known for. The problem is compounded when digital and in-branch systems operate separately, creating blind spots that allow declined or flagged applications to be tried again in person.
To keep pace with the evolving threat landscape, credit unions need to shift from siloed, channel-specific controls to an end-to-end omnichannel identity and fraud platform. That means consolidating data and decisioning into a single view, so suspicious activity can be identified and stopped no matter where it occurs.
Alloy’s experience with 700+ clients and 250+ pre-integrated data solutions offers clear insight into how credit unions can protect themselves from fraud without sacrificing the member experience. In working with credit unions nationwide, we’ve seen the most effective fraud prevention programs address risk as an ongoing relationship, not a one-time event.
Shift from onboarding-only checks to lifecycle risk management
Many credit unions concentrate their fraud prevention efforts at account opening. Once a member is onboarded, monitoring often drops off unless there’s a trigger like a major transaction or an OFAC hit. The problem is that risk isn’t static. A member who clears onboarding may later have their account compromised, demonstrate a sudden change in behavior, or engage in activity outside their initial risk profile.
Best practice:
Maintain a dynamic risk profile for every member that is updated continuously with data from all interactions.
If you’re not using Alloy (yet):
Treat onboarding as the first step in an ongoing risk assessment journey. Establish a baseline profile at account opening and update it automatically with new data points from transactions, account changes, or loan applications. This living process helps detect threats earlier and approve legitimate requests faster.
If you already use Alloy:
Audit whether you’re feeding all relevant events into Alloy — including account detail changes, failed login attempts, and unusual transaction patterns. Extend the same controls and data solutions you rely on at onboarding to ongoing touchpoints. For example, if you use a vendor for address verification as part of KYC, re-run that check when a member suddenly updates their contact details. Expanding your data inputs ensures lifecycle risk scoring reflects the most current and complete picture of each member.
For a real-world example of this in action, we can look at one of Alloy’s clients.
In 2022, a top-10 US credit union partnered with Alloy to prevent fraud at onboarding for consumer deposit accounts. The partnership expanded in 2023 to include login management, enabling the credit union to identify and block unauthorized devices attempting account takeovers by continuously linking onboarding and device data. Today, Alloy monitors over 20 million logins monthly for the institution, validating that device data remains consistent with onboarding records. As a result, the credit union has reduced its average fraud loss per member by 36% and cut overall fraud losses by more than 56% from 2022 to 2024.
Adopt a phased implementation approach for faster wins
Many credit unions want enterprise-grade fraud controls but feel daunted by the scope of a full rollout. Start with one channel — like digital onboarding — where gaps are most visible. Address that first, prove value with measurable fraud reduction, then expand to other channels over time.
Best practice:
Focus on a high-impact problem area first, then build from there.
If you’re not using Alloy (yet):
Identify the single channel or process with elevated fraud risk, or where member experience suffers most from manual review. Implement stronger controls there first to create a proof point — like reduced fraud losses or faster onboarding — that can help secure buy-in for broader adoption.
If you already use Alloy:
Use Alloy’s reporting to pinpoint where fraud is slipping through or where reviews take the longest. Prioritize workflow improvements or new data sources for that specific area, then replicate successful changes across additional channels in phases. This approach lets you expand coverage without disrupting your entire operation at once.
For example, Elements Financial Credit Union used Alloy to streamline digital onboarding, increasing auto-decision rates while detecting sophisticated synthetic fraud that had been slipping past manual review. Those early results — faster approvals for legitimate members and fewer false positives — gave them the data they needed to expand Alloy’s use across more channels without disrupting member experience.
Learn more about Elements Financial’s phased approach to fraud prevention
Close the “channel-hop” loophole for a consistent, omnichannel, and risk-aware member experience
Fraudsters know that many credit unions rely on separate systems for onboarding, branch activity, and ongoing account management. A fraudster might, for example, attempt to open an account online and get declined after triggering risk signals in the digital onboarding system. If the branch systems aren’t connected to that decision, the same individual can walk into a branch the next day, present the exact same credentials that were rejected online, and start the application process over from scratch. Beyond stopping fraud, credit unions also need to give members a consistent experience across acquisition channels — while recognizing that different products carry different levels of risk, such as lending versus deposits.
Best practice:
Connect in-branch and online systems so risk signals carry over — and calibrate controls to the risk level of the product.
If you’re not using Alloy (yet):
A centralized platform can eliminate silos by linking all touchpoints into a single, real-time member risk profile. That way, members encounter consistent onboarding wherever they apply, and stronger checks can be applied automatically when the product or channel presents higher risk.
If you already use Alloy:
Review whether all digital, in-branch, and call center activities are being fed into Alloy in real-time. Extend your onboarding policies across channels, but tune step-ups to reflect product risk where needed. Look for blind spots — like paper applications or manual changes made outside your core system — that could allow a bad actor to bypass earlier detection. Closing those gaps strengthens your defenses without adding extra steps for legitimate members.
Case in point: Mountain America Credit Union deployed Alloy Onboarding in its self-service application portal to balance convenience with security. Within weeks, they reduced approval rates of potentially fraudulent applications by 29% and cut manual reviews by 6%. Mountain America then extended the same protections to phone and in-branch channels, closing off opportunities for fraudsters to reapply elsewhere.
Read the full Mountain America case study
Personalize member experience with friction-right journeys
Members want fast, seamless access, and your team needs strong controls. The way to deliver both is to tailor friction to risk in every channel. Use a unified, real-time risk profile to fast-track low-risk members, apply light step-ups to medium-risk cases, and reserve stronger verifications (or denials) for high-risk scenarios. Done well, this approach reduces fraud without sacrificing experience and unlocks higher lifetime value through smarter product offers.
Best practice:
Calibrate friction to risk, where low risk = low friction, medium risk = adaptive step-up, and high risk = strong verification (e.g., device-based verification) or decline.
If you’re not using Alloy (yet):
Define simple risk tiers with the data you already have — like identity, device, geography, and relationship history. Map each tier to an experience across the lifecycle: low-risk members move money instantly or log in without added friction; medium-risk members face a light step-up; and high-risk activity triggers stronger verification, an in-branch review, or even a block on login or transaction.
If you already use Alloy:
Dynamically route activity to the right verification path as risk levels shift. This could involve using additional data sources, device checks, or a selfie/ID match when a transaction or login appears suspicious. Give low-risk members faster fund availability, higher mobile deposit limits, or pre-approved credit lines. High-risk cases may trigger stronger step-ups, investigation, or interdiction (e.g., freezing an account). Feed approvals, denials, and post-onboarding outcomes back into Alloy to continually refine thresholds and minimize unnecessary member friction.
Within months, Consumers Credit Union replaced one-size-fits-all checks with friction-right journeys across their digital and branch channels. Low-risk members now move through instantly while higher-risk cases get targeted step-ups — driving a 78% auto-decision rate, 96% faster policy changes, and a verified $5 in fraud losses saved for every $1 spent.
Explore how Consumers personalizes its member experience with Alloy
Continuously test and tune your workflows
Fraud patterns and member behaviors evolve constantly, and static fraud prevention strategies will eventually fall behind. Regularly evaluating your workflows ensures they remain effective against new threats while minimizing unnecessary friction for members.
Best practice:
Treat fraud prevention as an iterative process, not a set-and-forget system.
If you’re not using Alloy (yet):
Schedule quarterly reviews of your rules and thresholds. Compare current fraud trends against your detection results to see where adjustments are needed. Even small changes can close gaps or reduce false positives.
If you already use Alloy:
Take advantage of Alloy’s testing and reporting capabilities to A/B test new or iterate on existing rules, data sources, or scoring models. Testing in a controlled environment lets you measure the impact on fraud rates and member experience before rolling changes into production.
Brandon White, Senior Data Analyst at Ent Credit Union, shared how Alloy’s Testing Suite helps them optimize their fraud controls: "The intuitive navigation of the Alloy Testing Suite allows me to safely make changes on an ongoing basis without worrying about ‘breaking’ anything and empowers me to make changes autonomously."
Learn more about Alloy’s Testing Suite
Share learnings with industry peers
Your defenses need to move as quickly as fraud patterns do. Credit unions can learn from institutions across the country that face the same threats by attending summits, leveraging peer connections, and learning forums. This exchange of real-world experiences helps you anticipate new forms of attack before they hit your membership.
Best practice:
Share and learn from peers to strengthen your defenses with proven strategies.
If you’re not using Alloy (yet):
Look for opportunities to connect with peer institutions that have tackled similar fraud challenges. Even informal relationships can yield valuable insights into emerging threats and effective countermeasures.
If you already use Alloy:
Make full use of Alloy’s banking summits, networking opportunities, and the regular check-ins your Customer Success Manager hosts. Encourage your fraud and compliance teams to participate actively and bring back actionable takeaways to test in your own workflows.
See how Alloy helps credit unions close fraud gaps
For credit unions, every interaction is a chance to strengthen member relationships. By unifying identity and risk management across channels, Alloy helps you safeguard those connections from day one — and keep them strong for years to come.
KJ McAlpin is a Senior Content Marketing Manager, Fraud Strategy at Alloy, where they specialize in writing about fraud prevention, regulatory compliance, and innovation in financial services. With a focus on helping financial institutions and fintechs navigate an evolving risk landscape, KJ highlights trends shaping the future of identity, fraud, and regulation. Outside of work, they enjoy traveling, journaling, and spending time with their two black cats.
