A new paper from The Members Group seeks to reassure credit unions about using text alerts as a fraud prevention tool.
When used for fraud prevention, a card issuer sends a text message to a card holder about a recent transaction that meets the issuers parameters as suspicious. The card holder then has a chance to reply that they recognize the transaction or that they don't. If they don't, the account is suspended and the card issuer sends another text message with a phone number for the card holder to call for further investigation and instructions.
The tool has been found to have significantly limited card fraud losses and has often proved popular, but some credit unions still hang back, the payments CUSO reported.
“Yet even with the ease of use and potential fraud loss savings, some credit unions and community banks hesitate to take the first steps toward communicating with customers in this way,” the CUSO wrote, adding that the hesitation is often tied to one of four misconceptions: first, that card holders will dismiss fraud text alerts as spam; second, that merchant names in the texts will confuse card holders; third, card holders already receive too many marketing messages and, fourth, the credit union may not have yet rolled out other parts of a mobile banking operation.
Each of these can and should be addressed, TMG explained. First, card holders opt in text fraud alerts so it is highly unlikely they will see them as spam. Second, the merchant names in text messages are the same as those used in fraud alerts sent by other means, such as over the phone or in an email. Third, customers understand and treat fraud alerts differently from marketing messages and, fourth, the use of fraud text alerts can be a good first step toward starting a mobile banking program.
“Credit unions and banks understand they must begin to make more services available via digital, mobile tools, as they are becoming attractive to a great number of target consumers, including the under served,”TMG wrote. “Yet they also understand some customers may need to be eased into this new way of managing their finances. Starting a fraud text alert program is a simple way to condition customers to begin their banking via mobile phone.”