Vermont credit union leaders tell House committee they are expanding fraud defenses as AI scams rise

Credit union leaders told the Vermont House Committee on Commerce & Economic Development on April 7 that they are stepping up fraud-mitigation work and investing in staff and detection tools to protect members from increasingly sophisticated scams.

The testimony, delivered by a delegation led by Carrie Allen of the state Credit Unions Association and CEOs from several statewide institutions, said fraudsters are using new technologies — including AI voice-cloning and synthetic documents — to impersonate members and employees. John Dwyer, chief executive of Eastrise Credit Union, said the industry is hiring dedicated fraud investigators and using behavioral tools to detect abnormal access: "We are on average have somewhere between 20 and 30 members a month who give away their online credentials," he said. "AI is going to actually make it worse."

Why it matters: credit unions serve a large share of Vermonters and are front-line responders when members lose income or savings. Committee members pressed CEOs on how fraud controls interact with member convenience, and leaders warned that overly restrictive rules could hinder legitimate transactions while lax controls leave members vulnerable.

Leaders described a mix of operational measures and member supports. Bob Morgan, CEO of North Country Federal Credit Union, said many institutions have emergency products such as skipped-payment plans and low- or zero-interest loans for members affected by events like federal pay interruptions. "Most of us put up programs that not only include easy modifications for skipped payments... but a number of us had either 0% interest loans or very low interest loans," Morgan said, describing rapid deployment of those products during recent federal disruptions.

Speakers said the sector is increasing staff dedicated to fraud detection and is sharing intelligence across credit unions and with law enforcement. CEOs described using stricter transaction limits or graduated identity checks for higher-risk transfers, and experimenting with behavioral analytics embedded in online platforms to verify user authenticity without creating unnecessary friction for most members.

Several leaders noted that smaller institutions face the same threats as larger ones but with fewer resources. "The fraudsters don't care what size institution you are," said Brett Smith of One Credit Union, noting a recent flagged loan application that used fabricated pay statements. Smaller credit unions said they are considering hiring full-time fraud staff or relying more heavily on shared alerts and vendor tools.

Committee members also asked about governance and succession. Dwyer, who said he plans to retire in a few months after decades at his credit union, said his board has a search committee and is midway through selecting a successor.

There were no formal votes or policy decisions during the visit. Committee members thanked the visitors and said they would continue to consult with credit unions as legislation and oversight issues move through the session. The committee noted upcoming agenda items, including CTE discussions next week.