BETHPAGE, N.Y. — A couple of key fraud- fighting partnerships have helped Bethpage FCU save about $200,000 for its 250,000 members over just the last six months.
"We were looking for at least five years for an integrated fraud solution into Open Solutions, our core processer," said Bethpage FCU's SVP of Operations and Marketing, Robert Hoppenstedt. "We could not find anything integrated or at a reasonable cost." The majority of the fraudulent activity that $5.7 billion CU faced centered on credit card, ATM and check transactions. In an effort to squash these threats, Bethpage FCU joined a pilot program with the New York-based Quatrro Processing Services and its partner, Fortress Risk Management.
"Recent announcements by Target, Neiman Marcus and a host of other merchants on card breaches have created angst among the industry, which is often not fully prepared financially and operationally to handle the fallout," said Quatrro SVP of Business Development, Michael Borrelle.
If "credit union fraud" is typed into an Internet search engine, the list of related stories is endless. In early September, for example, one CU had 600 of its debit card holders compromised, prompting it to post messages about the situation on its website — not exactly the kind of promotion a CU wants to post.
Since the threat of fraud is ever-present, Bethpage FCU and its initial partner, Fortress Risk Management, decided the CU should join Quatrro's pilot program. Collectively they hoped that by employing enhanced twenty-four-seven fraud monitoring, threats could be handled in a more timely manner.
"Our use of Quatrro's Managed Services allowed us to seamlessly and effectively extend our existing staff into after hours, weekend and holiday coverage to match the never ending efforts of the fraudsters," noted Hoppenstedt. "Their collaborative approach to partnering with Bethpage and our combined laser focus on transaction monitoring has resulted in quite significant confirmed fraud saves and a higher level of member service."
Thwarting Fraud
Since March, Borrelle explained that Quatrro and Fortress fraud analysts dissected nearly 6,000 card transactions alerted by Bethpage's rules engine. This concerted approach cut down on false positives, enhanced rules development and detected fraud. It also monitored ACH and wire fraud threats.
"It is advisable to consider a strategic approach to resolving the ever-growing fraud issue. Rather than plugging gaps with point solutions, credit unions need to think holistically," said Borrelle. "Just because they are not getting hit with ACH or wire fraud today doesn't mean they won't tomorrow."
Hoppenstedt said the pilot was a team effort with Fortress providing the link to proprietary fraud management technology.As such, all card transactions were routed through Fortress' customizable Enterprise Fraud Management (EFM) solution.
The EFM platform includes hundreds of rules and a sophisticated scoring algorithm to flag potentially fraudulent transactions. Quatrro's team of fraud analysts accessed the platform's intuitive work pad to manage caseloads for the credit union, said Borrelle.
In order to achieve the best results, Quattro and Bethpage worked closely throughout the pilot phase. This included weekly production calls with rules recommendations and fraud trending discussions to keep Bethpage FCU better informed. "There was also testing and training involved with the fraud staff," said Hoppenstedt.
To date, Bethpage FCU has saved it members potentially $200,000 in fraud attempts, noted Hoppenstedt. In terms return on investment (ROI), for each dollar Bethpage FCU invested into Quatrro Processing Services they experienced nearly a $6 return in fraud savings.
