Hackers, hazards, and other scams

These days, it seems there are so many scams and not enough time. In a recent credit union-led session, credit union executives shared their insights and shed some light on the critical issues they are facing regarding fraud—particularly focusing on the various threats that credit union employees are seeing as their members fall prey to scammers.

Panelists including Joseph Kirkpatrick, President and Founder of KirkpatrickPrice, Greg Olmsted, President/CEO at North Alabama Educators, Alison Cooke, CPA, Manager/CEO at ACIPCO Federal Credit Union, and Paula Miller, Senior Vice President at Legacy Community Federal Credit Union, came together to share their expertise and provide valuable insights into combating these challenges.

Over 50% of credit unions report that they do not have a policy requiring members to sign a general notice on all wire transfers to alert them of known scams involving wires. Additionally, a staggering 100% reported that their credit union had at least one member who had experienced such scams within the last year.

Highlighting the similarities of the movie “The Beekeeper” (2024), which tells the dramatic story of the devastating impact of phishing scams and the lengths to which individuals might go to seek justice. This storyline underscores the real-world consequences of cyber scams and the emotional toll they can take on victims.

The discussion also highlighted specific types of scams, such as the loan advance and romance scams, which prey on individuals through stories of illness, sudden wealth, military service, and the need for assistance with deliveries. The prevalent payment methods associated with romance scams were identified as wires, gift cards, payment apps, and cryptocurrency. It was also mentioned that members fell victim to investment scams, with over 50% reporting such incidents within the last year.

To protect members, credit unions have been going above and beyond by hosting educational events in the community, like senior centers which provide easier access and aims to address the personal embarrassment and isolation that can be associated with reporting scams.

When it comes to member responsibility and safeguarding against scams, many agree that there is some personal responsibility on the part of the member, and over half of the credit unions mentioned that they do not require members to clear their computers before unblocking their accounts, they do provide suggestions and recommendations. Recommending multi-factor authentication, verification of account access, and hardware passkeys were suggested as effective measures to combat these threats, still these come with questions and none are full-proof.

The panelists also discussed specific scam types, providing insights, statistics, and strategies for resolution and prevention. For instance, the timeshare exit scam, which preys on individuals seeking to exit their timeshare agreements, has seen a significant rise and has led to victims losing substantial amounts of money. To address this, credit unions have implemented strict verification processes and launched educational campaigns and alerts to inform members about the risks and signs of timeshare exit scams.

Romance scams, involving fraudsters creating fake profiles on dating sites to deceive individuals and extort money, have resulted in significant financial and emotional damage. To combat this, credit unions have set up dedicated support lines for victims and collaborated with law enforcement to track and apprehend scammers. Regular workshops and informational sessions are also conducted to educate members on recognizing and avoiding romance scams.

The discussion also highlighted the line of credit scam, in which fraudsters pose as legitimate businesses or financial institutions to trick individuals into providing their personal information for unauthorized access. Through enhanced security measures and member education, credit unions have made progress in detecting and preventing unauthorized access in these scenarios.

Additionally, imposter scams, where fraudsters impersonate trustworthy individuals, were discussed as a significant threat. Experts recommended robust authentication methods and emphasized the importance of ongoing staff training to recognize potential scams.

Many credit union members may not recognize the signs of fraud. Educational events and regular communication can help members stay informed and vigilant.

Top 10 take aways and expert recommendations for mitigating scams

Implementing strong security measures: the need for robust security measures to prevent such scams. Credit unions can adopt multi-factor authentication, enhanced verification processes, and advanced fraud detection systems to protect their members.

Promoting community and trust: the importance of community and trust. Credit unions can foster a supportive environment by being transparent, responsive, and proactive in their fraud prevention efforts.

Implement strong internal controls: Establishing robust internal controls can help detect and prevent fraud. This includes regular audits, segregation of duties, and monitoring of high-risk transactions.

Conduct regular fraud awareness training: Educate both staff and members about the latest fraud tactics and how to recognize them. This can include workshops, webinars, and informational materials.

Utilize fraud detection software: Invest in advanced fraud detection systems that use machine learning and artificial intelligence to identify suspicious activities and patterns.

Promote multi-factor authentication (MFA): Encourage members to use MFA for accessing their accounts. This adds an extra layer of security by requiring multiple forms of verification.

Enhance member communication: Keep members informed about potential scams and fraud prevention tips through newsletters, emails, and alerts. Transparency and regular communication can build trust and awareness.

Establish a dedicated fraud prevention team: Having a specialized team focused on fraud prevention can ensure that your credit union stays ahead of emerging threats and can respond quickly to incidents.

Collaborate with law enforcement: Work closely with local and federal law enforcement agencies to track and apprehend scammers. Sharing information and resources can enhance overall security.

Offer support lines for victims: Set up dedicated support lines for members who have fallen victim to scams. Providing immediate assistance and guidance can help mitigate the impact of fraud.

Combating fraud requires a multi-faceted approach, including strong security measures and internal controls. The most important task is staying vigilant—by taking proactive measures and fostering a supportive environment, credit unions can work towards mitigating the risks associated with scams and protecting their members from financial and emotional harm.

To learn more about VisiFI and our connected and modular banking solutions, please visit www.visifi.com.