CHEYENNE, Wyo. - A $35-million credit union here raises the red flag on identity theft with the help of a new monitoring technology–scanning more than 1,000 public databases and alerting the member and the CU to suspicious activity.
The technology may help First Education FCU comply with the NCUA’s new “Red Flag” rules to protect against identity theft. The CU started scanning the mass of public databases using the ID Theft Solution provided by Secure Identity Systems (SIS) in January, said Jim Yates, president of the 3200-member CU.
The NCUA is requiring credit unions before Nov. 1 to write and implement a program to combat identity theft, including detection, prevention and mitigation, as part of Final Rule 12 CFR Part 717. Known as the “Red Flag” rule, it could push credit unions to use automated monitoring services to send out instant alerts of high-risk activity.
“There is a lot of identity theft that originates outside of the credit realm,” explained Yates. “The ID Theft Solution takes it to another level for the member by looking at additional, non-credit related activity.
“If we can detect a problem before it gets into credit activity and before it hits the members’ credit report, then we may be able to limit any losses,” he said.
Still, First Education FCU is struggling to find an affordable way to add an additional monitoring service: one that continuously searches the three major credit bureaus and reports back with suspicious credit activity, Yates added.
Red Flag poses two significant challenges to credit unions, Yates continued. “First, there’s prevention. How do you prevent something that happens to a third party? The majority of data breaches have been beyond the control of the CU that’s involved.
“Second, how do you go about detecting the potential fraud of your members based on fraud that is currently affecting other financial institutions?”
Yates is also concerned about the industry’s overall approach to fraud alerts–the third-party card processors tell the third-party monitoring services who tell the financial institution, he said. “If we rely on another third party to do the monitoring, it only increases the avenues for ID theft.”
At First Education, members are alerted to suspicious activity from more than 1,000 public databases, including Social Security numbers and motor vehicle, medical and utilities records, via the ID Theft Solution.
All credit unions should be scanning public records, said Chuck Blackburn, national sales director at SIS–looking at credit bureau activity isn’t enough to prevent identity theft.
“More than three-quarters of identity crimes can’t be detected by monitoring just the credit bureaus,” he said.
In addition, identity theft at the credit level is often slow to surface, said Blackburn. “Cyberthieves already have all the information they need on everyone in America. Many of the breaches go on undetected. It’s just a matter of them using your identification to build up a big balance on your credit and then walking off,” he said.
Beyond the monitoring services, First Education offers members insurance and recovery services. The CU’s checking account holders can use the recovery service for free, and premium accounts get insurance for free, as well.
SIS helps credit unions become the “hero,” said Blackburn. That’s party because the ID Theft Solution is “fully-managed,” which means that an SIS paralegal is responsible for 100 % recovery of the member’s identification.
“Assigning the member with an 800-number to resolve the crime is useless,” he said. “The member doesn’t have the time or expertise and is emotionally burdened.”
The SIS monitoring service is based on patented technology purchased in Israel, “which is way ahead of us in security,” Blackburn added. For example, SIS can make sure that the location of a credit card transaction matches the current location of the member by matching it to the current location of the member’s mobile phone, he said.
Yates was quick to add that monitoring technologies are not the mainstay of the credit union’s Red Flag program. Instead, “the compliance with new regulations and the effectiveness of individual policies will rely heavily on the diligence and attentiveness of credit union employees,” he explained.
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For info on this story:
* www.firstedfcu.com
* www.secureidentitysystems.com
* www.ncua.gov/Regulations OpinionsLaws/RecentFinalRegs/07-5453.pdf
