Helping credit unions and members safeguard against fraud during the holidays

This holiday season, it’s more important than ever for credit unions to safeguard their members and themselves against fraud and scams.

In our recent conversation with Ann Davidson, VP of Risk Consulting for Allied Solutions, she explained that fraud is “a higher risk area during the holidays because there’s more scammers out there, and they are going to attack.” But when properly educated, consumers can safeguard against it—and Ann offered some best practices to help:

F – Friends and family only. This is the crucial rule of thumb for using person-to-person payment apps.

R – Reinforce members’ options to help protect their account. Educate members on the layers of protection for their information’s security, including options like travel alerts, text message alerts, or a secure account passcode.

A – Authentication. The layers of authentication are critical. Layers of authentication can include dynamic authentication; biometrics for authenticating remote employees; tokenizing card and member account numbers; strong password requirements; checks and balances for member approvals; reviewing new account funding mechanisms; centralizing data to spot inaccuracies and red flags; and reporting merchants that permit card fallback.

U – Utilize 3D Secure, a fraud detection protocol used by Visa, MasterCard, and Discover. Many credit unions aren’t aware they opted out when it was implemented in 2001, so ensure your credit union is on the latest version of 3D Secure [currently 2.0] to best protect against card-not-present fraud.

D – Dollar Limits. Limiting the daily dollars spent on credit and debit cards and capping the number of transactions are two significant risk mitigation tools.

Using these methods will help protect your institution and your members. As the scammers expand their reach this holiday season, Ann recommended, “Credit unions can stay one step ahead by ensuring tight processes in every area of the business. Credit unions should identify, validate and confirm what layers of security they have in place, and work toward a holistic risk strategy to help catch fraud at the onset.” Educating members is a crucial piece. There are simple ways to accomplish this, like posting information or videos online, pamphlets at locations, and adding it to your newsletter.

If you need some help on what to include, Ann provided a list of some scams, and what to do, that all your members should know.

Common Holiday Scams and Consumer Education:

• Home Delivery Scams: Look up the delivery company number and contact them.
• Holiday Job/Recruitment Scams: Before responding, research to find out if the company and job is legitimate; especially pay-in-advance offers.
• Holiday Charity Scams: Before donating, look up the charity number and contact.
• Card Reissue/Block Scams: Don’t respond; contact financial institution.
• Technology Support Scams: Don’t respond; contact financial institution.
• Holiday Gift Purchase Scams: Don’t pay for item until you have it in hand.
• Travel ID Theft: Consider not using public computers or Wi-Fi/hotspots at the airport.
• Holiday Coupon Scams: Don’t respond to a coupon offer that requires private information to access.
• Holiday Vacation/Rental Scams: Perform resource before putting money down.
• Gift Card Scams: Check the balance with another clerk before leaving the store or consider purchasing a gift card through financial institution.
• Phishing Scams: Contact your financial institution before responding to an email/phone/text that asks for financial information.
• Holiday E-card Scams: Send email directly to sender before opening the e-card to ensure it does not contain a virus or malware.
• Social Media ID Fraud: Don’t post any information that could be used for fraud.
• Overpayment Scams: Major red flag – do not cash the check and stop all communications.
• Grandparent Scams: Contact the relative to let them know this is happening, do not wire the funds.
• Sweepstake Scams: If payment of interest is required for sweepstakes prize, it is 100% a scam and should not be paid.
• Chip Card Scams: Don’t provide info; check financial institution’s chip delivery plan.

When you combine these best practices and education for your credit union’s members, you’ll have a well armed membership working to help protect and safeguard themselves, and therefore your institution, against scams and fraud this holiday season.

You can watch our full conversation with Ann here.