CUNA Mutual Implements Plan To Decrease Plastic Card Fraud

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In an effort to stop-or at least slow-the "run away train" of plastic card fraud, CUNA Mutual Group is implementing new underwriting guidelines and requirements and reminding credit unions to strictly adhere to existing plastic card security and claims documentation requirements.

Earlier this year, CUNA Mutual Group CEO Jeff Post told The Credit Union Journal that card fraud had become CU Enemy No. 1. Consider the numbers: credit unions with CUNA Mutual's plastic card coverage reported $89 million in fraud losses in 2005-a 56% increase over 2004 losses, and a 123% increase over those in 2003, said Marc Krasnick, senior vice president, credit union protection products, and 2006 losses are already significantly worse than last year's pace.

The new guidelines, which were communicated to policyholder credit unions in a detailed letter, are designed to protect the viability of plastic card programs and to ensure the continued offering of this coverage for credit unions, CUNA Mutual said, asking credit unions to:

* Ensure plastic card security requirements and best practices are in place.

* For all Visa(r) and MasterCard(r) branded plastic cards, ensure that CVV/CVC is being validated on all magnetic stripe authorizations-including debit PIN transactions.

* Follow claims and recovery documentation requirements-or claims will be denied.

* Effective Aug. 1, ensure implementation of 24/7/365 fraud monitoring, a 24/7/365 response capability, and the ability to identify high risk activity and block or decline transactions when necessary.

For its part, CUNA Mutual will strengthen its underwriting by more carefully evaluating each credit union's plastic card program, including analyzing individual credit union experience, portfolio activity and exposure to fraud, and utilization of the plastic card security best practices.

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