MADISON, Wis. (12/17/13)--A payment-processing system breach in the Inland Northwest has financial institutions working to rein in the potential losses due to fraud.
Card holders in Washington may have run into holds on their cards when they went to make purchases. It's aggravating to a consumer, but restricting the types or amounts of purchases is one way that financial institutions can reduce the overall impact of fraud.
Credit unions in the Spokane, Wash., area began receiving increased reports of card fraud from their members in September. The common point of purchase: grocery stores that use URM Stores Inc. for their payment processing (The Spokesman-Review Dec. 15). Rosauers, Harvest Foods, Huckleberry's Natural Market, Yoke's Fresh Market and Super 1 Foods are among the grocers that use the network.
The exposed credit card data was sold on the black market and ended up on counterfeit cards. Fraudulent purchases have been reported globally.
The losses are mounting into the thousands, and it's not merchants or customers who cover the loss.
"Almost 100 percent of the time, it's the financial institution," according to Debie Keesee, CEO, Spokane (Wash.) Media FCU.
In Indiana, a credit union's card company and its core processor identified a common point of purchase relating to compromised card information (Herald-Times Dec. 3). Indiana University CU, Bloomington, had to re-issue approximately 4,000 new debit cards with new numbers. To protect the members, the credit union put the cards into a fraud-monitoring program that blocks signature-based "swipes" at the point of sale.
Reissuing the cards is an inconvenience, said Bryan Price, president/CEO of the $761 million-asset credit union, but it is a practical manner to control the fraud.
Another way for credit unions to protect each other and members is to share information about other types of fraud. Internet Archive FCU, New Brunswick, N.J., said it had been presented with a fraudulent official check that had been drawn off HEB FCU, San Antonio, Texas. On its website, HEB FCU urges that people call the credit union to verify official checks.
Last week, debit-card holders in Vermont were receiving automated telephone calls that attempted to collect account numbers (Newsline Express Dec. 13). The Association of Vermont Credit Unions advised credit unions to be alert and educate their members about the calls, particular that a credit union would never request an account number by phone, text or email.