An Internet search on the words Credit Union Fraud result in more than 535,000 website listings. The results vary from dealing with phishing, vishing, identity theft and bogus emails. What is the take away from this information? Battling fraud is a common theme among credit union professionals. Regulators and credit union leaders are developing new ways to fight fraud daily.
“Red Flag” provision of the FACT ACT tackles identity theft
One of the newest issues that Credit Unions are addressing are the new red flag provisions to the FACT (Fair and Accurate Credit Transaction) act. Under the new regulations Credit Unions will be forced to create “Identity Theft Prevention Programs” which will help detect, prevent, and alleviate identity theft. Some of the specific requirements include; practices to identity red flags, quick response to both mitigate and prevent fraud, regularly updated techniques to prevent fraud. Although the regulations won't have to be in place until November 1 st , 2008, many banks and credit unions are attempting to be ahead of the curve. Many of the top IT and Information Security Officers have begun sharing ideas on how they can implement these regulations without straining their resources. Some of the top concerns revolve around how to follow-up change of address requests as well as replacement or additional debit and credit cards. These both end up having a high connection rate with fraud.
Credit Unions Find New Ways to Educate Members in Fraud Battle
Credit Unions are changing the way they handle fraud. They are starting to attack the issue within their own walls by educating members about avoiding fraudulent communication from outsiders. A new type of fraud, vishing, is based around members giving out information to “credit union employees” who happen to be the perpetrators. Almost every Credit Union has stories of members giving away personal information to crooks. CU's such as National Institute of Health ($357.5M, Rockville , MD ) do the following:
- Online seminars
- Online tutorials
Hudson Valley ($2.12B, Poughkeepsie , NY ) has a risk mitigation department that helps track customer fraud and therefore can alert their members who may not actively check their account if possible tampering is occurring. Their ability to monitor member's habits have kept many of their accounts free from fraud due to early detection of possible issues. With the internet as one of the primary Credit Unions access points for many members, Credit Unions have to be ahead of the curve when it comes to giving their members the resources to avoid fraud.