9 Best Practices to Prevent Payments Fraud

Part of preventing fraud is staying informed and staying one step ahead of fraudsters. Whether we’re looking at account takeover, new account fraud, or transactional fraud, attacks are on the rise. According to Lexis Nexis:

  • Account takeover fraud is up 72% year-over-year
  • 1 in 7 new accounts are fraudulent
  • Mobile device fraud attacks are up 48% year-over-year

Protecting your credit union and its members is essential. Get started today by incorporating the following best practices to prevent payments fraud at your credit union:

1. Stay Informed About the Latest Industry Fraud Trends: Knowledge is power. Knowing the latest industry fraud trends provides you the ability and insight to identify fraud attempts against accounts in the early stages, enabling you to leverage tools to reduce the impact to your credit union and its members. Stay one step ahead of a fraud attack by taking action based on patterns reported within the industry.

2. Recognize and Identify Different Types of Fraud: Common fraud descriptors include Lost/Stolen, Card Not Received/Not Received Issue (NRI), Fraudulent Application, Account Takeovers, Counterfeit, Skimming, and Card Not Present. Knowing your lingo is helpful in approaching, analyzing, and reporting fraudulent events. This terminology helps clarify the scope of the fraud occurring and in discussing next steps to reduce financial losses at your credit union. It also helps when reporting fraud events.

3. Educate and Keep Members Informed: Launch an awareness campaign to keep members apprised of the latest fraud trends and news. Some card tools include prepared verbiage and messaging options within the platform. Want a completely customized campaign? Synergent Marketing Services can assist with preparing a tailored awareness campaign to meet the unique needs of your credit union and its members.

4. Implement Internal Fraud Mitigation Processes: Routinely review your internal protocols for preventing fraud at your credit union. This includes alerting employees on what to monitor and validate on accounts, including changes to cardholder mailing addresses, emails, and telephone numbers. It also could include incorporating a report monitoring process to detect fraud.

5. Block and Reissue Cards When Necessary: There are times when blocking accounts is necessary to avoid further losses. Set clear guidelines for staff to follow to determine when blocking accounts must be done and how affected cardholders will be notified.

6. Confirm Address Changes: In the event of mailing address changes, consider sending letters to cardholders at both their new and old addresses to confirm address changes.

7. Flag Potential Fraud With Monitoring Tools: While tools vary from card platform to card platform, numerous tools are available that can notify your credit union of cards that have been compromised before official Visa® or Mastercard® alerts are issued to the public. This also can help with reissuance decisions.

8. Don’t Forget About Mobile Wallet/Tokenization: Fraud prevention best practices are not limited to traditional card transactions only. With the rapid expansion of payment channels, ensure your staff is armed with mobile wallet/tokenization tools to protect your credit union and its members:

  • Develop fraud rule sets behind the scenes. Look for specific attributes that can be indicative of fraud. For example, this could include recent provisioning requests followed by large dollar authorizations.
  • Establish actionable intelligence based on what’s taking place in your field of membership. Consider whether contactless behavior patterns match the member’s general pattern of behavior. Reviewing the age of the account, whether the member’s mobile wallet ID has a clean history, and what purchase amounts have been attempted in the past are a few key areas that can be used to work into a rule set to trap fraud.
  • Revisit your authentication process. Offer a onetime passcode approach. To protect your credit union, it is important to have strong countermeasures to validate members safely and securely. Ask for unique identifiers, such as the member ID. These steps likely will frustrate a fraudster but will keep them from accessing an account. If necessary, staff can dig deeper into the authentication process if members have a mortgage or car loan.
  • Educate your members about fraud and potential red flags. Train your members on how to identify fraud attempts. Communicate fraud trends by publishing information on your website or sending out communications that contain this critical information.

9. Address Visa CAMS and Mastercard ADC Alerts: Train your staff to analyze the information provided in notices from Visa CAMS – Compromised Account Management System and Mastercard ADC – Account Data Compromise alerts documents. This will give you the confidence to choose the best line of defense based on the alert at hand.

Work With a Consultant

Efficient and effective fraud monitoring is imperative to financial institutions and this can only be achieved by leveraging products and the data that can be gathered from them.  By training staff on how to leverage the information gathered from these tools, credit unions will not only see a reduction in losses, but your cardholders will have a better experience when using their card as well.

Rebekah Higgins, Synergent Payment & Fraud Consultant, works with credit unions routinely to implement fraud prevention strategies. Contact us today to schedule a consultation with Rebekah, or to learn more about partnering with Synergent.