Tuesday, November 22, 2016

‘Tis the Season for Fraud: Seven Prevention Tips for Credit Unions

By Robert Jarosinski


With the holiday season around the corner, fraudsters are ready to attack. They know transaction volumes are significantly higher this time of year, so it's harder for victims to detect fraud. They also see new opportunities as consumers now make more online and mobile purchases than ever before.

So, rather than focusing solely on plastic cards this year, they’re moving to other means for stealing consumer data. This includes retail website databases, social media sites and more. And, once they secure key personal information, they can use it to take over accounts and spend hard-earned dollars that don't belong to them.

With unsuspecting members letting their guard down for holiday shopping, fraudsters may strike in any number of ways. Credit unions can protect themselves through the giving season by following a few tips:

1. Check your card parameter settings and current fraud rules. Ensure they're aligned with expectations. Use the holiday season to trigger check-ups at least annually. As one example, credit unions with card suppression settings turned off have have experienced significant losses because fraudsters were able to bypass protective card fraud rules.

2. Ensure that your member service center is on guard for fraudsters impersonating members. Implement strong authentication protocols and consider adding technology to score member interactions for risk if you don't already use it.

3. Review suspicious activity and confirmed cases of fraud in as close to real-time as possible.

4. Create fraud management rules to monitor and counter exhibited patterns of fraud. In particular, monitor for 3-D secure transactions (verified by Visa and MasterCard SecureCode). Credit unions have reported increases in fraud from this channel with no liability shift opportunity.

5. Validate CVV2 / CVC2 and Address Verification Services are used to ensure chargeback rights are preserved in a Card-Not-Present environment. This is especially timely because some reports suggest that nearly 50 percent of holiday shopping will involve online transactions.

6. Provide members with the ability to receive account alerts and promote its usage.

7. Stay on alert for “friendly” fraud perpetrated by members. Consider consequences that follow the law to help minimize and deter this kind of chargeback behavior. Maintain a positive member experience by scripting good questions for members and developing prepared answers to common objections.

Unfortunately, holiday fraud risks exist outside of credit union control. Credit unions and members working together is the best bet for mitigating risks. Check back soon for tips your members can use to protect themselves against holiday fraud. 

Looking for more risk management insights? Log into the Protection Resource Center or keep up with RISK Alerts – both available exclusively to Bond policyholders.

To obtain access to:
Protection Resource Center – Visit My Services at cunamutual.com. A RISK Alert subscription is included with your access.
RISK Alerts – Visit Edit Subscriptions. Select Credit Union Protection from the center menu and check the box for RISK Alerts.