MADISON, Wis. — The top fraud risks facing credit unions in 2011 are home equity line of credit wire fraud and card skimming, reported CUNA Mutual Group.
Brad Mundine, regional manager of credit union protection risk management, said counterfeit skimmed losses are still the largest plastic card loss type and account for roughly 80% of all plastic card losses in the credit union industry. HELOC wire fraud surfaced in 2007 and reemerged in 2010 "with a vengeance."
"Last year we had whole claims reported on just HELOC wire transfers of more than $6 million," Mundine said. "These are not total losses, just losses reported to us."
Mundine said it is difficult to make comparisons to HELOC wire fraud in 2008 and 2009, because CUNA Mutual Group started tracking the problem when it resurfaced significantly in 2010. "It really got our attention when it took off last year."
Fraudsters target members with large available HELOC accounts and generally request over the phone a wire transfer to a foreign bank, Mundine explained. The criminals pretend to be members using personal information many obtain by scouring the web, insisted Mundine. "They would know the credit union's security procedure for validating a member's ID."
Mundine said there are very simple, identifiable transaction characteristics to these fraud efforts that CUs can pay attention to and stop the scams. "If someone wants to make a wire transfer—not face-to-face but over the phone, e-mail or fax—and the person is pulling from a HELOC, and they are wiring to an institution outside the U.S., the credit union should stop that transaction and look into it more closely. It can help if the credit union's system can detect these things. I am not saying that if all of these three things are present in a transaction it is fraud, it is just highly indicative of the fraud patterns we are seeing."
These types of requests are typically routed through call centers or accounting departments, Mundine said, so the credit union should work to reach out and educate these members of the front-line team.
