EMV is here, and that is great news for U.S. consumers. The innovative security technology has greatly reduced card-present fraud in more than 80 countries that have embraced it, and according to creditcards.com, 2016 research by MasterCard and Visa reveals that counterfeit fraud has already declined significantly at chip-enabled merchants across the U.S.
While EMV has made the point of sale much safer for consumers nationwide, the same can’t be said for card-not-present transactions. In fact, industry data indicates that card-not-present fraud continues to rise year over year, and – as in the past – poses an even greater threat during the holiday season.
“Card-not-present fraud is not protected by EMV, and increases every year simply because it is relatively easy for criminals to steal card data online,” said John Buzzard, fraud expert with CO-OP Financial Services. “While credit unions excel at managing this type of fraud, the sheer volume of transactions conducted during the holiday season requires everyone to take extra precautions.”
Detecting Fraud in Real Time
According to Buzzard, every credit union should have advanced real-time fraud detection technology in place to monitor all transactions.
“If your credit union contracts with a third party to aid in fraud detection, make sure you maintain a very close working relationship with this organization, especially whenever there is employee turnover within the credit union or vendor organization,” said Buzzard.
Even with outside assistance, he adds, it remains vitally important for internal staff members to watch account activity closely.
“Just because a third-party is handling your fraud analysis doesn’t mean that this entity will spot a compromise faster than you can,” said Buzzard. “Make sure your staff remains vigilant, and if any concerning trends surface, share them with your third-party provider immediately.”
Empowering Members with Mobile Alerts
While systems and services can go a long way toward detecting and mitigating risks, Buzzard emphasizes the valuable role members can play in protecting their account data.
“With online card fraud on the rise, it is becoming increasingly important for consumers to play an active role in their own card security,” he said. “Providing members with a mobile app for card controls and alerts allows them to monitor all card transactions and stop any fraudulent attempts before they can be carried out.”
Buzzard adds that the most advanced tools in this space allow members to restrict transactions to certain geographic locations, merchants, merchant types, channels or time periods.
“Members can also use the technology to turn a card ‘on’ during a transaction and then ‘off’ again when the card is not in use,” he said. “Mobile security apps are highly effective – and very convenient for the member. They also serve as a point of engagement with your credit union.”
Educating Members on Safety Measures
To further help members secure their accounts, Buzzard encourages credit unions to take every opportunity to educate them.
“Members that shop online need to recognize the importance of varying their login IDs and passwords,” he said. “Using the same credentials across payment platforms quadruples a consumer’s chances of having all their accounts taken over.”
“Members should also be advised never to purchase from a retailer or organization they don’t recognize,” said Buzzard. “The biggest issue we see with Cyber Monday is that members are presented with so many great deals. If an e-mailed offer looks too good to be true, it could very well be fraud – which means members should delete the message immediately. If the offer is legitimate, it will certainly be featured on the retailer’s website.”
Buzzard also points to the importance of installing security software on all computing equipment.
“Make sure members know that their home PC and Android platforms need to be protected with antivirus and anti-malware software,” he said. “In the absence of these technologies, your members are likely working in an environment in which every keystroke they type is copied and sent verbatim to a fraudster.”
He adds that card-not-present fraud can occur just as easily over the phone.
“Advise them to be very cautious with overly coercive phone offers, and especially with robocalls,” said Buzzard. “Members should never provide account data, social security numbers or any other identifying information to solicitors. They should always hang up on these calls. If the offer truly interests them, they can call the company back to verify its validity.”
He continued, “Working together, credit unions and members can very effectively minimize card fraud and all the losses and inconveniences that go along with it. Remember also that the security resources and measures you employ deliver real value to members – and can serve as a point of differentiation for your credit union. Make sure branch employees tell members about all the many safeguards you provide. Highlight your security technologies in marketing messages and on ATM splash screens. Communicating with members about the protection you give them inspires trust and instills a sense of confidence whenever they reach for your cards.”
John Buzzard hosts CO-OP’s FraudBuzz webinar on the third Thursday of every month. Update yourself on the latest security issues – and collaborate on solutions. For information, click the banner below.