Staying ahead of fraud is not a new concern for credit unions, but it’s one that deserves renewed attention. As always, fraud is costly to credit unions – both in dollars and member confidence. Now, however, it’s also the center of a huge and sophisticated $200 billion industry, fueled by the ever-more-efficient gathering of card data and the burgeoning business of converting that data into money. As a result, credit unions can’t afford to slack off on fraud detection. Services that were perfectly adequate a few years ago may fall short now.
At BECU (formerly Boeing Employees Credit Union) in Tukwila, Wash., fraud detection and prevention takes a multipronged approach. BECU’s membership is large (increasing its exposure to fraud) and members are technologically savvy, meaning the tolerance for undetected fraud and false positives is low. Though BECU employs a risk-management team in-house, they also use CO-OP Financial Services’ Falcon Fraud Management for state-of-the-art fraud prevention.
“We instituted real-time decisioning in Spring 2009, establishing rules designed to detect and stop current trends we were experiencing,” says John Snodgrass, Security Risk Manager for BECU. “Our goal in doing this was to drive criminals that had targeted our BIN away from it. Stop enough unauthorized charges and they will eventually abandon the cards. In addition, our goal was to keep ‘false positives’ at almost zero, in order to minimize member impact. We have been able to successfully accomplish that while reducing losses and exposure.”
In the first several months of using real-time decisioning, BECU saved $300,000 in charges that would have been approved and posted without fraud detection. Savings topped $440,000 in 2009 and were more than $275,000 in the first eight months of 2010.
BECU doesn’t rely solely on Falcon Fraud Manager to halt card fraud. This past July, BECU was instrumental in catching a local restaurant employee who was using a card skimmer to capture data from customers’ cards. Several members had reported card fraud. Over eight to 10 months, BECU’s in-house team found that their common point of purchase (CPP) appeared to be the restaurant location. The BECU team turned their information over to law enforcement. When they went to arrest the restaurant employee, they found a card skimmer in her pocket.
“The compilation of data and identification of the CPP was done in-house by BECU,” says Snodgrass, “but we depended on Falcon to catch and prevent further loss.”
Not only does CO-OP’s Falcon provide state-of-the-art fraud detection and prevention technology, but it also includes seven-day-a-week case management services. As fraud becomes more prevalent – and difficult to combat – the budget dollars saved in case management fees (to say nothing of reduced fraud expenses) are more valuable than ever.
Find out more about CO-OP’s Falcon Fraud Manager at www.co-opfs.org/public/products/fraud_risk/falconFraud.cfm.