Identity theft and fraud are top-of-mind concerns in today’s online, data-heavy, digitally driven world. Sensitive information can be compromised in any number of ways, many of them outside a credit union’s ability to control. Skimmers are hidden on ATMs and POS stations, smartphones loaded with tantalizing information go missing, and emails with suspicious links are opened. Even something that seems far outside the realm of technology can lead to fraud, as when financial and personal documents are stolen out of mailboxes or a thief grabs a shopper’s wallet.
The statistics on mobile devices alone should be enough to give a credit union pause. According to a study conducted by the Ponemon Institute, a startling 60% of lost or stolen smartphones are believed to contain sensitive and confidential information. And unless those ubiquitous, go-everywhere devices are protected with a password or other protection tool, that data could fall into the hands of an identity thief.
Unfortunately, identity theft and fraud can occur even when credit union members are cautious. The best efforts to educate members on safe practices, coupled with the robust strategies credit unions employ to maintain stringent control over sensitive information, can’t completely close the gaps. Wily thieves still pry open post office boxes, and tenacious hackers still infiltrate the data stores of retailers, healthcare providers, and other data-rich companies. Their goal: to use their victim’s personally identifiable information to commit a range of fraud — from opening new credit accounts to employment fraud and, increasingly, medical identity theft. That’s where fraud protection services often come into play. These value-added offerings provide members with critical support not only in the protection of their confidential data but also in the fast detection and resolution of potentially fraudulent activity.
Traditional credit monitoring products provided credit union members with a good starting point for many years, but full-service fraud protection goes much farther and offers significantly more value as members face an evolving identity threat landscape. Credit unions may build their fraud protection programs as value-added benefits, but they also can design them to generate consistent revenues, incrementally, by charging members with modest fees. Fraud protection services might include support for financial fraud or medical and child identity theft, recovery from a break in or other disaster, assistance with a compromised email or social media account, and aid in replacing stolen or destroyed documents. Fraud protection providers are able to gather the information necessary to coordinate with local law enforcement if appropriate. They can even give members access to experienced fraud specialists for personalized, one-on-one support.
Fraud protection services act as an important piece of the credit union member loyalty strategy. By protecting members’ reputations against identity fraud, credit unions stand to strengthen their relationship with members. Additionally, credit unions reinforce the organization’s financial advocacy role in the lives of their members while offering a tangible, measurable value as a perk of membership. And in today’s environment, where attracting new members is as important as retaining and nurturing existing member relationships, credit unions that offer fraud protection give members the ability to coordinate and consolidate their financial activities under the umbrella of an institution they already trust. Identity theft is something most consumers think about, and credit unions that offer fraud protection services reinforce their position of value to members.
There’s another, deeper level to fraud protection products, one that provides value to the credit unions that offer it. Not only does a robust fraud management solution have the potential to provide credit unions with an additional revenue source — one that’s derived from a service that’s appealing to members — it can also impact the bottom line in other ways. By partnering with an experienced third-party vendor, credit unions are often able to shift some of their fraud department’s workload to the protection service provider. This not only has the potential to reduce operating costs for the credit union, it also saves money in the long run by speeding up fraud detection and resolution.
Download our latest whitepaper entitled Building Member Loyalty and Trust: How Identity Management and Fraud Detection Services Can Deliver Value-Added Benefits. Learn how credit unions can establish member loyalty and trust through identity and fraud protection services.
Matt Cullina is chief executive officer of IDentity Theft 911.