BALTIMORE — Protecting a credit union and its members from fraud requires familiarity with current scams, use of fraud prevention tools and ongoing training for employees, according to a risk management expert Chetta Hebron-Byrd, risk manager with CUNA Mutual Group, told AACUC conference attendees that it's important to understand the mentality of fraud perpetrators.
"This is a full-time job for them. They don't care if you're young or old, rich or poor. They're out to defraud you and your members," Hebron-Byrd said. "We recommend developing written policies that provide front-line staff
To minimize fraud losses, staff should closely inspect the individual's identification or driver's license, including issue and expiration dates, compare the signature on the new account application with that on the driver's license and minimize credit card account takeover by establishing prudent address change procedures and flag members' accounts to warn them an address change has been made on their account.
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Hebron-Byrd discussed several common scams including the "overpayment scam" in which a member selling merchandise is contacted by a fraudster posing as a legitimate buyer. The perpetrator sends a counterfeit cashier's check for an amount substantially more than the purchase price. The member notifies the buyer of the mistake and is instructed to return the excess funds by wire transfer.
Another popular scam involves a "bogus lottery." Victims are informed by mail or phone they have won a foreign lottery. Before they can collect, they are told they must pay lottery taxes and a fee. Yet another tactic used by fraudsters is the "U.S. Postal Service Money Order Scam" where the victim is contacted with a request to assist in negotiating U.S. Postal Service money orders in return for a percentage of the value of the money orders or a flat fee. The member is instructed to deposit the money orders, which are counterfeit, and to wire the balance of the funds.
Hebron-Byrd, who has more than 18 years of risk management and internal audit experience, said regardless of the
type of scam, credit union staff is the first line of defense in thwarting fraud.
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