Holidays Lead To Increase In Address Change Scams

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It's the most wonderful time of the year-for identity thieves.

A number of credit unions have seen a surge in change-of-address attacks on their accounts, according to CUNA Mutual Group, which has put out a risk alert urging CUs to guard against this type of activity, according to Ann Davidson, a plastic card expert in CMG's credit card protection division.

"It's an old trend with a new surge," she said. "Thieves continue to use change of address as a means of bilking money. They will find that open window, and once they do, they will repeat the attack over and over."

So the first step is to close the window.

"Credit unions need to take control of all address changes and centralize the process so that the same individuals can see the trends that may indicate an attack. They can see if a change of address has been requested across all accounts or just on one of the cards," she explained. "Most thieves don't change everything, they just change the one account. So that's one of the warning signs, and the credit union isn't going to see that if they're letting third parties handle change of address for them."

Other Steps To Take

The next step is to validate all new addresses before taking any action on a change of address request. Davidson there are a number of tools available to credit unions to help in the validation process, including Primary Payments systems and Issuers Clearinghouse.

And don't forget the low-tech, old-fashioned method: calling at the previous address, as well as the new address, to make sure the member really did move, Davidson advised.

Requiring members to make change of address through the U.S. Post Office can also help, but as Davidson recently discovered, that's not foolproof, either.

"I jut moved and changed my address through the Post Office," she related. "But [CUNA Mutual] has a call into the U.S. Postal Service because when I went to change my address, they didn't ask for any ID. That's making things just a little too simple."

Since changing address through the mail-either by using the USPS' change of address system or by writing a letter sent through the mail-is one of the most common ways to do a change of address, one of the first people a credit union should call if they suspect such fraud is the U.S. Postal Inspector, because mail fraud is a federal offence, Davidson noted, and the USPS does keep a list of "hot addresses."

"Run a daily report on all changes on that system twice a day," she advised. "Once a thief gets a change of address through, the first thing they'll do is ask for new or additional cards. Then they start sending in payments, called "booster payments" that are designed to lull a financial institution into thinking things are on the up and up-right up until they realize that the payments are being made from a stolen account. Once they've made their booster payments, a popular move is to go for cash advances, so the credit union should also be monitoring activity to look for a spike in cash advances."

Member education is also key, since a lot of cases of fraud are initially found by the member, when he realizes he's not getting his statements as usual, for example, or gets a statement that doesn't seem to match his spending activity.

One tip for members that most consumers don't even think about: don't use your own mailbox. "Never leave payments in your own mailbox for the letter carrier to pick up, because you don't know who might get to your mailbox before the letter carrier," she advised. "Only use USPS boxes to mail out your payments."

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