It’s Not OK That Fraud Happens All The Time

Mobile SMS alerts can help members help prevent problems.

By Dana Murn-Kohal

Fraud Alert, Mobile Phone with words Fraud Alert in Text My friend’s 80-something father-in-law called her recently, frantic. Someone had called him saying her son—his grandson—had been in a terrible accident and he needed to send money.

Fortunately, the father-in-law called to verify the situation before transferring any funds. And of course, the call was a fraud. My friend’s son was in school, totally fine.

In a CUES Webinar late last year (playback available for CUES members), John Buzzard, account executive and fraud expert at CUES Supplier member CO-OP Financial Services, Rancho Cucamonga, Calif., said a very similar type of socially engineered fraud—bail bond fraud—is becoming common.

In a bail bond scam, the criminal tricks a relative into posting bond to an account the criminal controls, often via wire or pre-paid gift cards. Buzzard noted that these scams can be averted if the victim hangs up the phone and verifies that there is actually someone in jail, like my friend’s father-in-law did. Panic works every time with this type of fraud, he noted.

Unfortunately, fraud of one kind or another happens all the time, according to Buzzard. He noted that one criminal group profited by about $121 million in 2016 by perpetrating ransomware attacks, which is software that holds someone’s computer or data hostage until the fraudster gets his payout.

According to statistics Buzzard cited from the Identity Theft Resource Center, there have been approximately 6,683 security breaches since 2005. ITRC defines a “security breach” as an incident in which an individual’s name plus his or her Social Security number, driver’s license number, medical record or financial record is at risk of exposure.

Fortunately, there are some things credit unions can do to fight fraud. For example, Buzzard said he knows of a credit union that announced plans to decline all card transactions at Wendy’s fast food restaurants after the chain was breached in January of last year. In addition, he suggested that SMS text alerts can be a great way to show members what’s going on with their accounts in real time so they can spot and report any unusual activity as soon as it happens.

Dana Murn-Kohal is CUES’ professional development and innovation manager.

Did you miss this webinar? CUES members can get this and other playbacks. (Join CUES.)

Cornerstone Advisors is CUES’ strategic provider for enterprise risk management services.

You may also be interested in CUES’ brand-new Payments University and CUES School of IT Leadership. Plus, CUES’ new Elite Access Virtual Classroom is offering live-taught, interactive online courses in payment trends in February and IT best practices in March.

 

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