July 16, 2026
Credit unions have historically built fraud and dispute infrastructures around a straightforward objective: determine whether a transaction was approved. However, this is no longer sufficient against shifting attacks increasingly driven by Authorized Push Payment (APP) fraud, where members themselves initiate transactions after being manipulated through sophisticated social engineering. With APP fraud ranking among the leading fraud types in 2025 according to the State of the Fraud Report 2026, the need for modernized dispute management is evident.
As discussions around Regulation E (Reg E) modernization continue, regulators are evaluating how existing protections apply to complex scam-related losses. This distinction raises an important question for credit unions: Are existing member protection frameworks and infrastructure equipped for fraud increasingly driven by deception?
Modern Fraud Has Changed Tactics
Traditional dispute operations were designed to investigate unauthorized transactions. Modern scam case reviews require broader capabilities. Rather than focusing solely on whether a transaction is valid, review teams must understand whether a member knowingly executed the transaction or acted under deception.
Consider a common scenario. A member receives a call that appears to come from their credit union. The caller explains that the member’s account has been compromised and instructs them to move the funds into a secure account. Convinced by the caller’s knowledge of their account and with the intention of protecting their money, the member validates the transfer. The payment is authenticated, security controls function as intended, and yet the member still suffers a financial loss.
That shift from authentication to intent represents one of the most significant operational changes facing credit unions. According to ACI Worldwide’s Scamscope Report, APP fraud losses in the U.S. are projected to rise from $2.16 billion in 2023 to $3.08 billion by 2028, meaning this dispute challenge is one that credit unions will continue to face over the next decade.
Why Fragmented Workflows Create Compliance Risk
Regulatory expectations are evolving alongside the fraud landscape. Recent Federal Reserve examination findings demonstrate a growing focus on the quality of evidence documentation, citing institutions for insufficient written explanations and incomplete dispute documentation. Compliance is measured not by a deadline being met, but by whether the institution can produce a complete, transparent, and defensible record of its investigation.
Credit unions must be capable of reconstructing the timeline of events, gathering supporting context across multiple channels, and assessing if the available evidence contextualizes the authentication determination. Completing those steps requires coordination across fraud operations, disputes, digital banking, payments, contact centers, compliance, and legal teams. Analysts may need to review the signals that were present, transaction records, authentication logs, device and session data, fraud alerts, digital banking activity, member communications, and prior case records.
Most of the necessary information already exists, but it is often dispersed across multiple applications and departments. Investigators must gather files, reconcile information, and coordinate with several teams before they can produce a defensible record. When documentation practices vary and ownership is fragmented, these handoffs introduce delays, reduce visibility, and make it difficult to maintain a cohesive record. Operational risk increases as a result, while case decisions become challenging to explain and defend during examiner reviews. The compliance conversation is moving beyond simply following Reg E timelines toward ensuring institutions have the operational infrastructure to consistently document, govern, and defend how case decisions were made.
Building Infrastructure for Intent-Based Investigations
Most credit unions already possess much of the information needed to investigate modern scam disputes. The opportunity lies in bringing that information together through structured, centralized case record workflows. As fraud shifts from unauthorized transactions to deception-driven scams, credit unions need intent-aware case management that captures context, preserves evidence, and documents how investigative decisions are reached. This requires capabilities that extend beyond traditional fraud controls, including contextually intelligent interventions, evidence-centric data architecture, and the ability to reconstruct a complete decision journey across systems and teams.
Artificial intelligence (AI) has an important role to play in this evolution by supporting repeatable, information-intensive tasks. It can aggregate information across multiple systems, build timelines, summarize large volumes of documentation, identify missing evidence, and surface patterns that may otherwise be overlooked. These capabilities can significantly improve efficiency as case volumes continue to increase. Human expertise also remains essential as investigators must still evaluate conflicting evidence, determine if authorization can reasonably be supported, apply regulatory requirements, and approve final outcomes and member communications.
Effective AI depends on strong governance and consistent case documentation. When evidence is fragmented or investigative processes vary, AI is limited in its ability to generate reliable insights. Well-governed case management provides the structure needed for AI to support intent-based investigations while preserving the transparency, accountability, and auditability that evolving regulatory expectations demand.
The Next Era of Dispute Investigations
Smarter scam methods and Reg E modernization are pushing institutions toward a new investigative model. As fraud advances from compromised credentials to manipulated decision-making, credit union teams must understand intent rather than authentication. This shift changes what investigators are required to understand and document, while exposing the limitations of fragmented processes.
Strong governance will become a defining capability as fraud tactics and regulatory expectations continue to evolve. Credit unions that can align case work across teams, preserve a complete record, and provide clear, defensible explanations of their decisions will be better positioned to protect members, satisfy regulators, and strengthen operational resilience.
–By Sriram Natarajan
President, Quinte Financial Technologies
President, Quinte Financial Technologies
