Results from a recent CU Times survey are in, and they might just surprise you. Based on responses from 141 credit union professionals nationwide, the survey findings have since been published in a new CU Times whitepaper, entitled “Standing Up to Fraud: How Credit Unions Mitigate the Threat Landscape.”
Painting a picture of the industry’s experience with – and readiness for – fraud of all types, the white paper also includes commentary from industry experts, including Terry Pierce, Senior Product Manager for
CO-OP Financial Services.
According to CU Times, the objective of the survey and white paper is to help credit unions assess the state of card fraud in the U.S. today and benchmark their own success in fighting fraud against that of their peers.
Fraud is on the Rise
So what exactly is the state of fraud today? Pierce notes in the white paper, “We are seeing the continuing increase of fraud due to data breaches, ATM skimming and card compromises. In addition, we are starting to see an increase in account takeover fraud.”
Feedback from the survey’s participating credit unions concurs. In fact, more than 87 percent of respondents have suffered from one form of fraud or another, with more than 70 percent impacted by merchant breaches. Forty-two percent of those surveyed have had internal systems hacked, and 32 percent have experienced fraud at their payments processor. Plus, nearly 20 percent have been affected by compromises at another financial institution.
How Credit Unions Fight Fraud
To prevent fraud, more than 40 percent of credit unions surveyed rely on internal controls, and approximately 23 percent employ cybersecurity measures. Roughly 20 percent of respondents utilize data and analytics, and nearly 14 percent incorporate employee training into their efforts.
While each of these approaches is essential in the fight against fraud, the survey uncovered one key area of weakness for credit unions – only 2.75 percent reported having formal member education programs in place.
What Members Need to Know
Pierce believes this broken link in the chain is one every credit union should repair. Her commentary in the white paper states, “Members should be aware of fraud trends such as phishing schemes and fraud resulting from computer viruses and malware. Members also need to be alert to when an ATM looks suspicious and educated on what to look for in terms of skimming devices and other forms of ATM tampering.”
Securing Internal Systems
Survey findings also point to another common area of vulnerability for credit unions – their own internal systems. Eighty-three percent of respondents reported that their computers that access member data also access the Internet, while less than three percent could confirm that their computers that access member data don’t access the Internet.
Pierce noted, “The key thing is insuring your network isn’t easily available, and if it is, you need to build a network of firewalls to ensure that it’s secure. The Internet is pretty scary – once your system is open to the Internet, anyone can go in there and attack. That’s what is happening with a lot of the hacks. The hacker is finding a back door into the system.”
How CO-OP Can Help
CO-OP’s Card Member Security Team monitors trends and writes new rules daily to proactively attack fraud, increasing protection for credit unions and their members. Utilizing the latest in fraud detection technology – including the Falcon Fraud Manager, plus an advanced scoring system and specialized research – CO-OP’s team works around the clock on your behalf.
And, in the event of a compromise, CO-OP’s dispute processing and fraud recovery teams manage disputes and chargebacks for signature debit transactions, adhering to the most stringent network regulations.
CO-OP also helps members take fraud protection into their own hands with CardNav by CO-OP, the company’s mobile app for card controls and alerts that allows cardholders to determine exactly when, where and how their cards can be used.
She added, “Credit unions need to educate cardholders about fraud on an ongoing basis, taking advantage of every member touchpoint. From e-mail blasts and in-branch signage to security reminders on your website and ATM splash screens, let members know about your fraud detection services, and advise them to respond immediately whenever a fraud analyst contacts them.”