Poodles or Ferrets?

Things aren’t always what they seem.

April 15, 2013

Can a ferret pass for a toy poodle? Absolutely, according to a Huffington Post article.

Reportedly, cons at an Argentinian bazaar successfully passed off fluffily furred ferrets on steroids as toy poodles—much to the dismay of a patron who discovered the ruse after taking his fancy faux friends to the vet for vaccinations.

We can only imagine the disappointment, humiliation, and outrage these prospective pet people experienced at the hands of the dubious dog dudes. Although their experiences were unfortunate, the scam was one with relatively minor consequences.

Financial fraud, by comparison, can be devastating to consumers, business owners, and financial institutions alike. Famous financial “con-turned-respected-authority” and FBI associate Frank Abagnale believes “punishment for fraud and recovery of stolen funds is so rare, prevention is the only viable course of action,” as reported on his “14 Tips to Avoid Identity Theft.” 

Can you and your members tell the proverbial ferrets from poodles? Think about your fraud-prevention strategies and member awareness as you peruse this week’s findings. Are there trust issues?

What a tangled web they weave…

“A majority of organizations experienced attempted or actual payments fraud in 2012,” says the “2013 AFP (Association for Financial Professionals) Payments Fraud and Control Survey.”  This report underscores “the importance for organizations to mitigate their risks to such fraud, including using appropriate services and procedures to minimize exposure.”

Some key findings:

How might fraud hit your credit union? See “Examples of Financial Institution Fraud Investigations—Fiscal Year 2013” from the Internal Revenue Service. Real life stories of embezzlement, mortgage schemes, money laundering, and Social Security abuses will prompt you to consider preventive efforts.

What about cybersecurity? Familiarize yourself with various issues and legislation on this important topic in “Cybersecurity: Authoritative Reports and Resources” by the Congressional Research Service. Here you’ll learn that “no major legislative provisions relating to cybersecurity have been enacted since 2002, despite many recommendations made over the past decade.”

This sprawling topic “includes national, international, government, and private industry dimensions.”

Are you ready to respond to potential cybersecurity problems?

Consumers are painfully cognizant of fraud issues, too. “ACI’s Global Fraud Survey” reveals that “one in four respondents fell victim to credit, debit, or prepaid card fraud during the past five years, with more than 20% reporting they plan to stop using, or switch from, the card impacted by fraudulent activity.”

Prevailing card fraud requires consumer education and “call to action” for financial institutions that must “remain constantly vigilant and earn the trust of customers by working with them to combat fraud.”

This report gives “specific advice on steps financial institutions should take in dealing with fraud, including why educating and engaging the customer… can help minimize attrition and improve customer experience.”

Indeed, “Identity theft tops list for 13th consecutive year in report of national consumer complaints,” says the Federal Trade Commission. The agency’s annual report of complaints indicates 18% of consumer complaints had to do with identity theft, 43% of which were related to tax or wage fraud.

Interestingly, “Despite the risk of fraud associated with the theft of Social Security numbers, just five of the nation’s largest 25 banks have stopped using the numbers to verify a customer’s identity after the initial account setup,” according to The New York Times

A Javelin study informs that “Social Security numbers are required to open a bank account, but shouldn’t be used after that as a requirement for initiating communications with the bank,” as may occur with subsequent service interactions. Of course, Social Security numbers are valuable resources for scammers.

What are your policies on use of social security numbers for identification purposes?

Trust in me

On the job, trust is important for employers, employees, and consumers alike.

One thing that tests trust is change, and communicating change can be challenging. According to “Can ‘Those People’ Be Trusted?” we learn the importance of building communication strategies “around the solid majority of good guys—the ones we trust. Treat people with respect and the magic will follow.”

Bosses should listen up. “Eighty-two percent of workers don’t trust their boss,” claims another SmartBlog post, “Building a Culture of Trust.”

This post suggests that trust begins with leadership and a trusting culture fosters an environment where employees will thrive. A few ideas to accomplish this goal:

Trust is easily lost. Whether we are pet shopping, proactively protecting our financial interactions, or creating positive work environments and personal interactions, establishing the basis of trust and cooperation is important.

As Frank Abagnale believes, prevention is certainly the best medicine in fraud mitigation. But in our personal interactions, we cannot easily apply prevention. Hesitation to be forthright or transparent in our communications may actually breed mistrust.

Perhaps in offering trust, we have to take a risk. Per the musings of Ernest Hemingway, “The best way to find out if you can trust somebody is to trust them.”






Lora Bray is a research librarian at CUNA.