SEATTLE — Detection of card fraud requires vigilance of outside vendors to ensure processors follow the "60/40 rule where the system detects 60% of the fraud," according to a CUNA Mutual Group senior risk manager.

In a general session talk at the annual convention of the Washington Credit Union League, Brian Fisher of Pittsburgh said the ideal detection system "will push that number above 70%", but CUs need to be alarmed when too many members instead of the processor alert the CU to fraud.

Citing other red flags, the CUNA Mutual insurance executive also said CUs should be wary of time lags in processors detecting fraud. Pointing to a "detection time chart" on a one to seven day scale, CUs need to ask "at what point in the fraud scheme did the system detect the fraud." In his remarks, Fisher reiterated warnings made earlier this year by CUNA Mutual management about forecasts of CU losses in 2006 topping last year's $89 million. With changes in internal operations and best practices, "credit unions can win" the fraud battle or at least keep ahead of the crooks. He said the largest amount of fraud perpetrated against CUs continues to be from Eastern Europe.

Continue Reading for Free

Register and gain access to:

  • Breaking credit union news and analysis, on-site and via our newsletters and custom alerts.
  • Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders.
  • Educational webcasts, white papers, and ebooks from industry thought leaders.
  • Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.