By 2020, plastic card fraud is expected to grow 45% to reach $31.67 billion worldwide, according to The Nilson Report.
It seems as though scammers develop new tactics every day. From collecting card data with ATM skimmers and point-of-sale (POS) shimmers to committing application fraud and account takeovers through phishing and social engineering, the need to secure the payment process is critical.
As you develop your credit union’s strategy to combat payment fraud, focus your efforts on member communication/education and technology.
Member communication and education
Maintain frequent communication with members and educate them about plastic card threats to help mitigate their risk and the risk to your credit union.
Build trust in your credit union’s processes and security levels by communicating with members through your website, newsletters, and in-person about how your credit union is combating fraud.
Know your members‘ behaviors, and implement the framework to identify suspicious transactions and high-risk account changes. Be mindful, however, about balancing member inconvenience with fraud prevention.
Provide card-handling best practices to your members, such as:
Also, ensure your members understand the circumstances under which your credit union will contact them.
For example, you will call to assist them in spotting scams but you will never contact them to request their account number, card number, PIN, or other identifying information.
Staying up-to-date on the latest anti-fraud technology can help keep your members’ data safe.
If you haven’t already done so, adopt EMV (Europay, MasterCard, Visa) chip technology. While EMV won’t solve all your fraud problems, it is the most effective step you can take to prevent card-present fraud.
Consider whether to issue EMV-enabled chip cards when replacing expiring cards, or to replace your credit union’s entire card portfolio at one time.
Once you have adopted EMV, decline transactions that are missing CVV/CVC codes. EMV shimmers do not capture these unique codes, so transactions without them may be fraudulent.
Develop rules specific to fallback transactions based on your credit union’s risk appetite. Factors to consider include transaction amount, merchant category code, and transaction location.
Also, conduct regular inspections of your ATMs to ensure shimming or skimming devices have not been placed.
Consider adopting new technology to help in the fight against fraud.
Predictive scoring models and alert management systems can help you identify suspicious patterns in transaction data.
Also, instant card issuance eliminates the risk of a mailed card being intercepted. Not only can instant issuance help increase member satisfaction, but it can also increase your revenue opportunity as the card is activated and in the member’s hands immediately.
While there is no perfect solution to stop all card fraud, through continuous monitoring you can learn from situations where fraud does occur and adjust your processes and controls as a result.