How Credit Unions Can Streamline Dispute Management in an Era of Rising Fraud
The financial industry is experiencing a rise in fraudulent activity, creating significant operational challenges for credit unions nationwide. With global chargeback volume predicted to reach 324 million transactions in 2028, a double-digit increase over the 2025 forecast of 261 million, credit unions must change their approach to dispute management, critical to both maintaining member satisfaction while protecting their bottom line.
Understanding the True Impact of Rising Fraud
This challenge extends far beyond simple transaction volume increases. According to the 2024 State of Fraud Benchmark Report from Alloy, 79% of credit union and community bank decision-makers reported fraud losses exceeding $500,000 in 2023, the highest segment surveyed. Meanwhile, the Federal Trade Commission (FTC) received approximately 2.6 million fraud reports last year, essentially unchanged from 2023. However, consumer losses increased sharply, totaling over $12.5 billion, up 25% from 2023.
In 2025, fraud trends are shifting dramatically, driven by evolving technologies and emerging schemes. Insights come from LexisNexis Risk Solutions’ 2025 Cybercrime Report, analyzing over 104 billion transactions processed in 2024, found that first-party fraud – including chargeback and bonus abuse – jumped from 7.6% in 2023 to 30.4% in 2024, making it a predominant form of attack. Third-party fraud, such as account takeover, now represents ~30.5% of all fraud cases.
Credit unions face a perfect storm of rising chargeback volumes, with the value of global chargebacks set to rise from $33.79 billion in 2025 to $41.69 billion in 2028, a 23% increase in just three years. This is further compounded by inefficiencies in traditional manual dispute processes that create bottlenecks, delay resolution and erode member trust.
The Financial Brand recently noted, “Fraud and scams are rising rapidly, placing greater pressure on financial institutions to counter increasingly sophisticated threats,” citing 290,000 identity theft cases and 117,000 credit card fraud incidents in Q3 2024 alone, based on data from the FTC. “Credit union leaders are increasingly concerned about the prevalence and impacts of fraud and scams – on their members and their business,” according to Filene Research, noting that 41% of credit union members were fraud victims in 2023, compared to 36% of non-members. When members experience fraud, their perception of a credit union’s response – speed, transparency, and funds restoration – defines the relationship. Manual internal systems often fail to meet these expectations, risking permanent damage to member loyalty and increased losses to the credit union.
The operational costs associated with manual dispute processing can also be substantial. Staff members must manually track each case, coordinate data entry and updates with multiple systems, and ensure regulatory compliance throughout the process. This approach not only drains resources but also introduces the potential for human error that can compromise case outcomes or create compliance violations and increased losses. Adding to this challenge, Deloitte's Center for Financial Services predicts fraud losses could exceed $40 billion by 2027 due to generative AI, which may magnify the risk of deepfakes and other banking fraud. This will further strain credit union staff and budgets.
Regulatory Compliance in a Complex Environment
Beyond operational efficiency concerns, credit unions must navigate an increasingly complex regulatory environment surrounding dispute management. For instance, the NCUA's 2025 Supervisory Priorities emphasize managing credit and cybersecurity risks, as loan delinquencies hit their highest since 2013 and credit card portfolio perfor...