MADISON, Wis.-Wire and ACH fraud appear to be on the rise once again, according to CUNA Mutual. The big driver? Mortgages.
"In this scam, fraudsters comb through real estate transactions searching for members with HELOC with high credit limits," said Risk Manager Ken Otsuka during a webinar hosted by the company. "This is pretty easy as mortgages are a matter of public record. Since members sign the mortgage document, fraudsters now have a specimen to practice from."
The fraudster then calls the credit union, asking for a large advance against the HELOC. Once that is obtained and placed into the deposit account, the fraudster contacts the CU again, asking for a wire transfer. Following security procedures, the credit union conducts a callback, but the member's phone has either been forwarded to an untraceable line or the fraudster requests a phone number change well in advance of trying to pull off the scam.
"Credit unions should verify that the phone number had not been changed within the last 30 days, this is part of the definition of a secure telephone line," Otsuka said, adding that basic personal information is no longer good enough for security questions as fraudsters simply have "too much information" on their hands.
ACH fraud is also surging, noted Risk Manager Ann Davidson, who pointed to a late 2009 report that showed that such scams are costing businesses and financial institutions a total of $100 million a year.
"It's a huge risk today and we need to be one step ahead of those fraudsters out there and what they are attempting to do," she said. Davidson implored CUs to implement dual controls, which ensure that the same employee who handles the incoming request does not also handle the outgoing transaction. This method would stop even a sophisticated fraudster who managed to install a keystroke logger on an employee's terminal, as he would have to obtain both the username and password for two employees instead of just one to pull off the scam. Exposure limits and IP lockdowns also help CUs stay ahead of the game.
"Fraud environment is dynamic and it is always changing. Fraudsters keep finding new ways to perpetrate the same old frauds," Otsuka said. "I think credit unions need to realize that we're all in this together. Risk mitigation and loss prevention is everyone's responsibility."
