Fraud and Security: Come Out Fighting!

There’s no room for weakness or tentative jabs when keeping member data safe.

February 10, 2014

I watched with incredulity and a bit of horror as Trainer Tom helped me don a pair of boxing gloves at the gym last week. Never had I considered myself delivering one-two punches and right jabs.

“Look, Tom, I am not a fighter. You won’t find me in the ring. What is this about, anyway?”

Trainer Tom sighed. “Lora, you are a fighter…it’s instinctive. It’s about balance, coordination, confidence, self-defense, and reflexes. We’ll build your strength, challenge your thoughts, and get you out of your comfort zone. Now—athletic stance! Gimme your best shot!”

I threw a tentative punch at the bag. Tom grimaced.

“What was that?” He challenged. “Throw your weight into it! Left foot forward, punch! Pa-POW! Keep your hands up; protect yourself! Duck right! One-two-THREE!”

When it comes to protecting member data and maintaining a secure environment for financial transactions, you have no room for weakness or tentative jabs. It is essential to maintain strong defenses and come out fighting for your members should fraudulent activity ensue.

Consider your strengths and weaknesses. Can you improve your athletic stance and protect yourself from a security haymaker?

‘The world ain’t all sunshine and rainbows’—Rocky Balboa

We need not look far to find corruption and security problems. Be aware, though, that old problems can take new guises in our digital world.

For example, “Target Card Breaches Open New Front in Old Battle with Bankers,”

“Bankers want retailers to cover more of the cost of breaches. Retailers say bankers need to adopt more secure card technology. Lawmakers must decide whether to act to require tighter security or swifter disclosures.”

As financial providers absorb “at least two-thirds of the cost” of security breaches, retailers clamor for more secure technology to prevent such incidents as they see no options to outdated payment system technologies.

Fraudulent activity is a complicated issue and problematic for not only consumers but also financial providers, retailers, and lawmakers.

The government’s role in fraud issues is further explored in “Identity Theft: Trends and Issues,” by the Congressional Research Service.

It reveals that policy makers are concerned about the prevalence of Social Security numbers “in both the private and public sectors” and the many opportunities for identity theft that persist with this reality.

Congress has taken action to curb ID theft with legislation naming it as a federal crime and with “enhanced penalties for aggravated identity theft.”

Further, Congress directed the Federal Trade Commission to issue an Identity Theft Red Flags Rule, “requiring that creditors and financial institutions with specified account types develop and institute written identity theft prevention programs.”

Read this interesting study to gain perspective on the issue of fraud for policy makers, and consider how it might impact your activities.

Take note of “Fraud and Corruption Trends to Watch in 2014.” “Fraud may be a moving target, but banks of all sizes are going to be under closer scrutiny than ever in the coming year of potentially fraudulent actions,” says this Bank Systems & Technology article.

Regulatory scrutiny remains pervasive, and smaller financial providers must take note as compliance issues are not relegated to large institutions. Further, regulatory monitoring “is now moving beyond the traditional banking sector to nonbanks, including credit card issuers, insurance providers and gaming enterprises.”

Also, security concerns will expand to areas beyond IT to a board-level exercise.

It is further expected that data analytics will assist with internal audit, compliance, and oversight as it is utilized to “detect potential instances of fraud and implement effective fraud risk mitigation programs.”

‘Service to others is the rent you pay for your room here on earth.’—Muhammad Ali

Good service for members will result when you share “Five Ways Identity Thieves are Targeting You.” 

Here are the most common ways identities are stolen:

  • Fake Wi-Fi networks in public places that allow fraudsters to hack accounts;
  • Crooks who pose as Census workers to collect personal data;
  • Social media profiles that allow criminals to send fake offers from favorite retailers in attempt to collect financial information;
  • Direct calls from crooks requesting personal data; and
  • Bank account data that’s sold from one thief to another.

Small businesses may be interested to know about “Five No-Brainer Tips to Avoid Getting Hacked.”  Entrepreneurs can limit their exposure by verifying they have logged out of all accounts at the conclusion of work sessions, updating passwords frequently, and examining email links carefully—phishing remains rampant.

How might you further reassure consumers that you are in their corner? Such outreach may be important as “Consumer Confidence in Online Privacy Hits 3-Year Low,” according to Adweek.

Fewer consumers [55%] now trust businesses with their data, down from 57% last year, and 59% in 2012, the article notes. This is becoming a marketing and branding issue.

“If users don’t trust the site, the brand will suffer significant consequences down the road,” observes one marketing vice president.

As Mobile Usage Grows, Lack of Trust in Security Still Hampers Mobile Banking,” observes eMarketer. When consumers centralize personal data on mobile devices, risk is posed to both financial providers and end users. But attempts to protect consumers with enhanced security features are not always appreciated.

“This highlights consumers’ conflicted relationship with privacy and security,” although for some, “that security helps instill a sense of trust.”

Nearly half of consumers “did not trust systems that only relied on passwords” and “46% reported that they did not use websites that had what they deemed ‘easy’ identification and authorization procedures.”

How do you achieve graceful balance between the security necessities and service conveniences your members expect as you adopt your digital stance?

I’ll never be a prize-winning pugilist, despite Trainer Tom’s encouraging tutorials. I have, however, gained an appreciation for the components and connections the successful boxer masters.

Physical strength, stamina, knowledge of one’s opponent, speedy reflexes, and lightness of feet are important. So is reliable equipment and an understanding of the rules. Coaching helps.

How many of these elements are necessary when you fight fraud at your credit union?

Deliver a knockout punch!





  Lora Bray is a research librarian at CUNA.