CCUL Headlines: Compliance

CU Insight: Beware of emerging fraud threats

Wednesday, August 2, 2017   (0 Comments)
Posted by: CU Insight
Share |

Editor’s Note: This article was originally featured on CU Insight on July 20, 2017 and has been modified.

The fraud network is an elaborate and illicit underworld exchange. The precious commodity of confidential information – social security numbers, account numbers, passwords and more – is auctioned, bought and sold for profit at the expense of the owners (and protectors) of the data.

The perpetrators of payments fraud never take a day off. They are reliably relentless in their criminal mission to separate people and companies from their valuables. The methods and tools we use to detect and prevent fraud today may no longer be as effective or comprehensive as the ones we need tomorrow, as the techniques used by fraudsters continue to evolve. Instead of waiting for the next attack, proactively addressing emerging fraud threats can dramatically reduce the number of fraudulent transactions and mitigate fraud losses.

Credit unions should adapt their risk management strategies to account for these two relatively new types of fraud: Loyalty Redemption Fraud and Caller Authentication Fraud.

A fast-growing trend, loyalty fraud is a way for fraudsters to launder money by stealing and then reselling rewards points or goods. It targets the loyalty rewards points members accumulate from their debit and credit card transactions. Loyalty fraud costs more than redemption points, and it carries a potential negative impact to the credit union’s reputation and brand.

Call center fraud happens when criminals use the phone channel to impersonate consumers to gain access to their account funds and sensitive data. Over 61 percent of fraud starts with a phone call, and the voice channel accounted for more than $10 billion in fraud in the U.S. in 2016.

It is imperative that credit unions and their partners protect every transaction across multiple payment channels and points of interaction. Continued investment in the strongest risk management tools and practices available is essential in protecting members from the potential financial and reputational damage associated with fraud. Identifying fraud attempts early on can reduce costs associated with the fraud lifecycle, which makes early detection more important than ever.

Credit unions can leverage the scale and buying power of their partners to shore up their own risk management strategy and protocol. Working with these partners to identify and address emerging fraud trends like loyalty redemption fraud and caller authentication fraud can go a long way toward not only preventing fraud, but also to creating a more seamless and fulfilling member service experience.


Contact Us


1000 Saint Albans Drive
Suite 325
Raleigh, NC 27609

800-822-8859 Phone
919-573-0474 Fax


7440 Broad River Road
Irmo, SC 29063

PO Box 1787
Columbia, SC 29202

800-822-8859 Phone
803-732-4268 Fax