LAS VEGAS-Card fraud has slowed to a crawl at Clark County Credit Union here, and CIO Roy Holmstrom is wondering whether he should thank his card-fraud prevention system for the good news.
"Card fraud has dropped through the floor over the past three months," Holmstrom said. "We're getting one or two calls from members per week, which is nothing for a portfolio of 40,000 cards."
The $562-million CU doesn't wait for fraud warnings from VISA. Instead, a card-fraud prevention platform called TrueCards alerts CCCU to potential fraud in its portfolio every morning, said Holmstrom, who also serves as CFO at Clark County CU (CCCU). CCCU deployed TrueCards from Greensboro, N.C.-based Advanced Fraud Solutions (AFS) more than one year ago.
"Dollar-wise, card fraud is no longer a pain-point for us," he said. As of March, CCCU had filed about $7,000 in claims in 2010. Claims were at $271,000 in 2009, down from $499,000 in 2007. Bond claims fell to $86,000 in 2009 from $285,000 in 2007. Recoveries each year ranged from $81,000 to $121,000.
"We take a proactive approach, and one of our preventative measures is TrueCards," he explained. "I do credit TrueCards in playing a role in fraud reduction."
TrueCards imports all card authorizations and postings every night and places alerts on suspicious or unusual transactions-those that fall outside of parameters set by CCCU. VISA CAMS alerts are also loaded into TrueCards, and members' calls about fraud are manually entered.
Each morning, CCCU staff examines a TrueCards "stop, block, and reissue" report to identify any patterns. "Once we have a high degree of confidence that a card may be subject to a common point of compromise, we shut it down," said Holmstrom.
Resolving the Problem Instantly
After the CU shuts down a card, CCCU's instant card-issuance technology automatically replaces the card. The CU contacts the appropriate members, who can can pick up and set a custom PIN for their new card at a branch the next business day.
"Reissuing cards can be an inconvenience to the member, but members have been very supportive," said Holmstrom. "They realize it's better than having their entire debit card checking balance wiped out."
Credit unions told Credit Union Journal they are weeping over their 2009 card fraud loss and expressed a need for technology that will help prevent fraud (Credit Union Journal, Dec. 14, 2009). VISA alerts aren't effective, they said.
"By the time VISA is absolutely certain that they've identified dead-bang fraud and issues an alert, we've already been hit," agreed Holmstrom. VISA is so busy trying to please both merchants and card issuers that issuer protection can't come first, he suggested.
Only five credit unions use TrueCards, according to AFS. TrueCards is a "slam dunk," Holmstrom continued. "In just over a year, the amount of fraud loss we've prevented has paid for the costs of the software and server."
Asked if TrueCards is ringing in the end of card fraud at CCCU, Holmstrom replied: "I'm certainly not going to remove TrueCards or any other preventative measures to find out. Sometimes fraudsters wait awhile to use compromised card data-otherwise they'd point themselves out."
TrueCards is one part of the CU's anti-fraud strategy, said Holmstrom. "We issue our own cards; many of our cards are picked up at a branch by our new members; we restrict mailed PINs; we utilize custom blocking rules at VISA and make restrictions such as per-day purchase amounts and cash withdrawal limits." Fair Isaac's Falcon Fraud Manager neural network complements CCCU's TrueCards technology.
