BROOKFIELD, Wis.-Debit card fraud may be higher profile, but one person is warning that check fraud is still a major concern for credit unions-especially with so many new members in recent months.
Mike Urban, Fiserv's director of financial crime risk management, recommended that CUs tailor their product offerings specifically to each new member as a way to hedge against fraud. The problem, he said, is how to tailor the risk related to a credit union's most basic product offering (and the item that brought many bank customers to CUs in the first place): the checking account.
One possible solution, he said, is to put thresholds and limits on accounts, such as limiting remote deposit capture. At that point, fraudulent activity "becomes fairly difficult then to manage at a large scale."
"It really comes down to being able to leverage, or having a provider leverage analytics to identify when risk is starting to take place" said Urban, adding that Fiserv is working on bringing that type of capability to market later this year, likely in Q2.
Urban also pointed to an increase in fraud directed specifically at financial institutions ("third-party fraud") as opposed to fraud directed at a specific account ("first-party fraud"). "That's where the whole on-boarding process and screening process becomes very important, because you want to be able to pick off these people on the way in as best you can," or at least find a way to mitigate the riskier members, such as by setting account thresholds or restricting access to certain account features, he said.
They Look 'Completely Innocent'
"It really comes down to the ability to share data and leverage, getting the identity verification up front so that you can make sure you think you know exactly who this person is, including taking a look at their past history at financial institutions," he said. "There's data providers that provide the ID verification service and provide the retail banking history, which is almost as important-maybe more so, in some cases-than the credit score. What is that person's history with financial institutions, in terms of: Have they gone through several accounts? Why were those accounts closed? What kind of risk is associated with me taking this person on?"
One important thing to remember, he reminded: "The best criminals look completely innocent."
