When Fraud-Fighters Lack Skills For The Job
RANCHO CUCAMONGA, Calif. — There are almost limitless fraud threats to credit unions, but for one person the biggest threat is actually at the credit union.
Connie Trudgeon, VP-operations with CO-OP Financial Services, said she is particularly concerned with credit unions that believe they have anti-fraud expertise in-house, but that in fact it is often "lacking."
"Whatever new service or product that is being brought to the table, the credit union needs to know how the members and the data are being protected," she advised. "When a member calls in, how is the credit union authenticating so it knows it really is talking to the right person? At ATMs there are threats from skimming. On the transaction side, there is exposure in looking at the right reports. Credit unions can't cover all those bases if they aren't ready."
Other areas where Trudgeon advises CUs to shape up:
• Educating staff on all aspects of fraud.
• Ensuring support up to speed.
• Verifying that best practices are in place.
• If the credit union outsources aspects of security, knowing which elements are the responsibility of the company and which are the responsibility of the credit union.
• Ensuring member contact information is being updated for those times a transaction needs to be authenticated.
• Educating members on how to protect their personal information, and making sure they are aware the credit union will never ask for information in an e-mail.
• Ensuring a good neural network that gives real-time denial capability for risky transactions, which is a "basic requirement," is in place.
Trudgeon said CO-OP has worked with CUNA Mutual Group on developing a number of best practices for card fraud, with input from other credit unions card processors. She said the company has dedicated risk analysts who analyze confirmed fraud every day and spot trends.
"We continue to look for other applications and tools that will improve our performance," she said. "We offer monthly webinars on card fraud."
Fair Isaac Company has a fraud alert form online, which Trudgeon said allows law enforcement, financial institutions and card processors to share information. "The goal is to identify new trends and the fraudsters themselves. We check this several times per day to monitor what is happening. If we see something happening in a certain area we will identify a rule. Sometimes we will reach out to MasterCard or Visa. There is a lot of sharing of information in this industry."
The fraud issue "will never be over," Trudgeon said. "It is global, and there is so much going on than there was before. Only the credit union knows its own environment, what looks right and what doesn't make sense for its field of membership. The good thing is, there has been a lot of work done in recent years to put out good tools and offer support. One critical element is real-time capability in the neural network, which sometimes can deny the first fraudulent transaction, rather than accepting a loss of two or three transactions before the fraud is stopped."