PSCU Financial Nabs Employee In ID Theft Effort
PSCU Financial Services said one of its employees has been charged by United States Postal Service authorities after the company discovered the employee was part of a ring involved in fraudulent account takeover activity.
In all, some 184 credit union member credit card accounts were compromised for a total of $1.6 million in fraudulent activity. In addition to the employee, several others in the South Florida area have also been charged by postal authorities; because the alleged wrongdoing involved requests for new cards to be mailed to new addresses, the wrongdoing is a federal crime.
PSCUFS spokesperson Mary Pateuk said the employee, who has confessed to the crime, was selling the card data to others on the outside. The company became suspicious after seeing a spike in claims credit unions were making for account takeover fraud after members reported charges to their accounts that were not theirs. The company noted that in this case, the pattern of fraud was extremely difficult to detect because the majority of affected credit unions had only one or two accounts taken over.
She added that PSCUFS has policies in place not to issue a new card for a certain period of time after a member reports an address change, but that some issuing credit unions did not have similar safeguards in place.
PSCUFS, which services nearly eight-million accounts, is now in the process of reimbursing all credit unions for their losses, since issuers eat losses on fraudulant account activity. It has also been in contact with CUMIS so that credit unions that filed claims with their bond provider are not reclassified as representing greater risk.
"The bad news is that we were affected by fraud, but the good news is that our security measures helped detect and limit the fraudulent activity in this case," said David J. Serlo, President of PSCU Financial Services.
The company added that a "system-wide review detected how the data was being compromised and helped to identify the sources of data used to bypass existing security measures."
Meanwhile, PSCU Financial Services said it will be sponsoring a series of educational seminars around the country in December to aid credit unions in implementing procedures and processes to guard against card fraud.
Several of the Security Summits are open to all credit unions, regardless of which card processor they use. "Education and adoption of industry standard practices go hand in hand to combat credit card fraud. Attendees will be armed with the tools and techniques to implement an effective credit card fraud fighting program," added Serlo.