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WASHINGTON – Fidelity National Information Systems, the firm which processes credit card transactions for the greatest number of credit unions, is teaming up with Card Services For Credit Unions and the Independent Community Bankers of America to educate banks and credit unions about fraud prevention tools they can use to limit fraud damage and remain in the card business. The three organizations want to remind both CUs and smaller community banks that while the industry may be experiencing a spike in card fraud cases there are tools and strategies available that even small issuers can use to prevent losses. Robert Hackney, president of CSCU and a recent appointment to the Visa USA Board, explained that the three organizations wanted to re-establish a little balance to the message that credit unions and community banks were being sent about credit cards and fraud. “We understand the need that CUNA Mutual has to fight the fraud issue and, believe me, we aren’t looking to minimize the fraud threat,” Hackney said. “We just also want to make sure credit unions remember that credit cards usually provide the highest return of any loans in their portfolios, in addition to being a primary relationship product for their members.” Hackney said the organization echoes Visa’s observation that even with the spike in card fraud that the industry is experiencing, the fraud rate still hovers at only seven basis points, up from six, and that in terms of overall card transactions, the costs can be controlled. “I will grant you that the likelihood is that credit unions and small issuers may be feeling the pain of the spike more than larger issuers,” Hackney said. “But we want to make it clear to them that there are things that they can do to limit their fraud exposure and that we are here to help them take those steps.” Hackney said that even though the fraud prevention message has dominated credit union card news for months, the three organizations believed that they cannot reiterate the message too often. In some cases there may be credit unions that think they have done what they needed to do only to have not done it correctly or others that may feel overwhelmed by what they have to do, Hackney explained. “We want to help them to do it and do it right,” he added. “Card fraud risk is just like any other form of lending risk. It can be managed and credit unions just have to learn how to manage it.” The organizations’ position on the card fraud question has been furthered by an emerging consensus among some industry analysts that some of the card fraud concerns have been driven by media coverage more than by actual threat. Hackney pointed to an article in the July 3 issue of BusinessWeek magazine that made the case that while millions of card accounts may have been compromised in security breaches, relatively few of them have actually resulted in card losses to their issuers or to the cardholders. The article pointed out that despite a lot of the media hype, it is relatively difficult to translate stolen card data into dollars-in part because consumers and issuers are quick to act when card breaches are identified and in part because the card issuers and processors have adopted sophisticated technology that tracks card transactions and scores them, flagging and blocking those which are deemed suspicious. “Mostly we want to make sure credit unions get a balanced message on card fraud,” Hackney said. “Yes, there is a risk there but it can be managed, we can show you how to manage it and cards are still one of the credit union’s best assets.” [email protected]

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