Why Same Old Scams Keep Working

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ONTARIO, Calif. — It is amazing-and sad-to Salvador Mendoza that many of the same banking scams used for years are still working today.

Mendoza, VP of network operations for FSCC, said the answer is simple: training and education efforts must be stepped up. "Credit unions must commit resources to train and educate staff from basic check and identification verification to scams that are used every day by criminals," he said. "Until someone close to them or their credit union suffers a loss, awareness is not there."

The same lack of awareness also holds true for members, he noted, meaning credit unions must educate them as well. Mendoza sees a combination of vulnerabilities for fraud among all financial institutions, not just credit unions. There are common areas where credit unions need help, he said, such as check fraud, cyber theft of personal information, account takeover, online opening of new accounts, and electronic areas such as wires and ACH.

On the plus side, he added, there are tools to battle such threats, but CUs must search them out. FSCC, for example, has tools available to assist credit unions to minimize, if not prevent, fraud.

"Our shared branching rules provide guidelines in check acceptance and ID verification," he began. "Additionally FSCC developed a fraud alert system in 2001 that has been quite successful. This alert system incentivizes credit union staff with a $100 CU for Kids Visa gift card from FSCC…when they minimize or prevent it."

In the last four years, CU employees have prevented more than $4.4 million in fraud, and FSCC has issued 240 awards to those staffers, he noted. These efforts have also helped authorities apprehnd several criminals and fraud rings.

Other tools include a PowerPoint fraud training tool available, free of charge, to all FSCC-participating credit unions. Mendoza said the training contains "very helpful" techniques on verifying checks presented for deposit, validating identification, identifying counterfeit currency, and how to make observations of individuals such as age, height, and other characteristics needed to provide to law enforcement. "It is amazing how some of these simple steps can help minimize fraud," he said. "Criminals are always on the lookout for that employee that does not seem to be fully engaged in the transaction and is easily disrupted. They are opportunists."

FSCC also has an online fraud tracking tool that its client CUs can use to minimize shared branching fraud, but few take advantage of it. "This is in part because of the current economy and the cost of the product. Although for most credit unions, one $10,000 incident of fraud would pay for this service for a number of years."

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