It Takes A Village To Fight Fraud

Dealing with fraud is a daily activity at credit unions. Threats come through multiple channels, and a combination of people, processes, and processors working together is the best line of defense.

That’s the case at American 1 Credit Union ($321.5M, Jackson, MI), whose approach to fraud detection and prevention is a good example of best practices that today’s modern cooperative financial institution can use to protect their member-owners and themselves.

Amy Nichols has been with American 1 for nine years, the past four as payment systems manager at the 170-employee, 14-branch enterprise. She says outside partnerships and in-house training are essential, but so is educating members and alerting them to problems.

Here, Nichols offers more detail on how this Wolverine State credit union fights fraud.

What are the main kinds of fraud American 1 encounters?

Amy Nichols: Like most financial institutions, American 1 has experienced check fraud and fraud from compromises and merchant breaches.

What “real-time” anti-fraud options do you offer?

AN: We use our card processor’s fraud alert system to offer members the option to receive text alerts if suspicious activity occurs on their account. This level of protection enables us to proactively identify and stop card fraud.

What else does the credit union do?

AN: We use our core system to set daily count as well as dollar count limits on our cards to minimize exposure. We offer an in-house instant issue card printing service that allows members to stop in to replace a card anytime if they are concerned about the safety of their card number.

American 1 also offers mobile wallets ― Apple Pay, Samsung Pay, Android Pay ― which use tokenization and are a safer alternative to credit and debit cards. We’re developing our own educational program on the benefits of using mobile wallets.

Please describe the credit union’s “people” work against fraud, for example, training and raising awareness.

Amy Nichols, Payment Systems Manager, American 1 Credit Union

AN: American 1 takes an integrated approach to fight against fraud. We work diligently to keep not only our staff but also our members educated.

We have a team that is specially trained to spot fraud trends. In addition, we train all staff members in their first few weeks of employment on how to protect our members against fraud.

We also have an internal webpage that staffers can access at any time that includes information about the latest fraud scams. This keeps our team constantly informed and educated on the topic.

American 1 has been a community leader when it comes to education around fraud. Our newsletter includes a fraud corner that educates members on current fraud events. And we use our website and blog to educate members and the community.

American 1 Credit Union publishes a blog that mixes community and credit union news with advice on PIN security and news about breaches at major merchants. Click here to read “Choosing A Secure Pin.”

Who takes the training? Who conducts it? How often? What does it entail?

AN: Our cards processor hosts a monthly fraud webinar that our team of fraud specialists attends on a regular basis. Our internal Payment Systems team regularly visits our branches to discuss fraud topics that range from retail store card breaches to local scams that are taking place in our communities.

What does the credit union do when it detects a problem?

AN: American 1 takes a proactive approach. The moment we begin to see card disputes, our team looks for a common purchase point. In doing so, we’ve detected multiple sources of compromises and contacted the local authorities to investigate further.

Also read: How An Alabama Credit Union Took Down A Skimmer

Please describe your relationship with other stakeholders in the fight against fraud.

AN: American 1 has joined forces with different groups — including credit unions, banks, law enforcement, and, at times, the Secret Service and the IRS — that meet regularly to discuss fraud. Sharing information has not only helped protect American 1 from losses but also has helped us all come together to fight fraud and protect our community.

Bottom line: What’s your best single piece of advice to fight against fraud?

AN: Education is key. Educate staff, membership, and the community on how they can protect themselves.