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WEST PALM BEACH, Fla. – Feel that the fight against “fake CUs” is like fighting a ghost? Credit unions can take heart that in addition to efforts by NCUA, NAFCU, CUNA, NASCUS and law enforcement agencies, credit union leagues are upping the ante and experts say communication trumps con artists. “It is difficult to fight,” said CUNA Mutual Protection Solutions Group Risk Management Specialist Vince Wagner. “There is no particular pattern on which credit unions are targeted, they seem to just pick names. While this may sound simplistic the first step is for all credit unions to be aware that their credit union identity can be taken or spoofed.” While banks started off as initial targets for years, credit unions were next in line with the appearance of fake Century CU ads in Missouri last summer. The fake company was based in Florida and released advertisements in Missouri, Ohio, San Francisco and Indiana. The legitimate credit union based in St. Louis, Missouri contacted the Missouri Credit Union Association, local police, the Federal Bureau of Investigation, NCUA, the Federal Trade Commission and the Missouri and Florida regulators. Over on the West Coast an ad for Zurich CU a nonexistent credit union was placed in an Everett, Washington-based newspaper. “I guess we were kind of the guinea pigs for them,” said Missouri Credit Union Association Vice President of Public and Legislative Affairs Amy McLard. “We notified everyone we could think of and to the best of my knowledge we haven’t had a problem since but we were just the first part of their learning curve and now unfortunately they seem to have more direction.” In late fall, First Rate CU burst on the scene with an alleged headquarters in New York. Then Continental CU in Scranton, Pennsylvania came upping the number of states with the false advertising to 20. Recognizing the challenge involved in the fraud fight, Wisconsin Credit Union League Director of Communications Chris Olson says credit unions here have done a fantastic job of notifying the league when they spot something, and that a proactive approach is the best weapon. The WCUL has also created standard information forms for newsletters and risk alerts notifying media contacts and credit unions. “Don’t wait until you see an ad pop up in your state,” said Olson. “Preemptively send out warnings to newspaper advertising departments, post warnings about this activity on the CU and league Web sites and write about it in credit union newsletters. Keeping everyone in the loop is how you stop this.” Developing that networking relationship has helped WCUL identify two recent scams within days of an ad attempt. The Wisconsin Department of Financial Institutions’ Office of Credit Unions has notified the Wisconsin Newspaper Association that scam artists are attempting to place ads here for Advantage CU – a legitimate credit union in Wisconsin. According to DFI, an individual who is not associated with the real credit union has contacted some three newspapers in Beloit, Eau Claire and La Crosse to place an ad for Advantage CU. The ads show phony information from the DFI and the actual credit union’s logo. Some of the red flags include a (866) phone number that did not match up to the actual CU’s number. In addition when the same group attempted to impersonate Heartland Credit Union allegedly based in Newton, N.C., Olson forwarded the information to the North Carolina Credit Union League the same day so that warnings could be sent. “My opinion is that part of the reason why these criminals are targeting credit unions is because of their reputation as member friendly financial institutions,” said Wagner. “So they target that person who needs a loan or has a hard time getting credit.” Ferndale, Michigan-based Credit Union ONE Compliance/Security Officer Mark Sebastian is only too familiar with the ploy as his CU’s corporate name was fraudulently used to solicit debt consolidation services. One of the fraudulent ads that ran in December stated the following: “Need a Fresh Start? Consolidate your debt. Call Credit Union One at (866) 475-8024. Regardless of your credit status we can help.” Consumers that call the number are asked to provide personal information including social security number, date of birth, employment information and drivers license number. In addition, they are asked to pay via wire transfer or cashier’s check advance payment fees ranging from $300 to $2,500 to cover such items as insurance, border taxes and processing fees. Sebastian agrees that a national press release to all media outlets is effective, and in his case news/information giant Gannett not only notified its 101 newspapers’ ad department but also ran a consumer alert in its publications. One thing is certain the scams are not going away says Wagner. “I hate to predict but this scam can take any form and from the amount of money that can be made from it we can expect it to continue,” said Wagner. “It all helps from having a good relationship with the papers letting them know that there is only one person authorized to establish ads to periodically running your CU name through a search engine on the Internet to see what you get are just some of the proactive steps credit unions can take. In the end the best defense is knowing what is going on out there.” [email protected]

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