CUNA Mutual Urges Neural Networks ForFraud Detection
MADISON, Wis. - (07/07/06) -- CUNA Mutual Group, in order to stemrising losses on credit and debit card programs, is telling itscredit union clients they must deploy stricter fraud-detectionsystems in order to keep their insurance coverage. The credit unioninsurer expects credit unions to lose about $120 million this yearfrom card fraud, up 35% from $89 million in 2005, with about halfof it covered by CUNA Mutual. The insurer will require that creditunions, either through card processors they hire or through theirown card-processing systems, use acceptable fraud-detectionsoftware to continue insurance coverage. These fraud-detectionsystems are commonly referred to as neural networks. They candetect suspicious transactions, based in part on past cardholdertransaction characteristics, across banking and merchant paymentchannels. CUNA Mutual said that all credit union insurance renewalsstarting August 1 will require the use of fraud-detectionsystems.