MADISON, Wis. — CUNA Mutual is warning credit unions about a costly new attack by fraudsters on members with home equity lines of credit.

The sophisticated schemers already have struck at least 18 credit unions, which reported losses or fraud attempts totaling more than $6.5 million, with more losses expected, CUNA Mutual said.

Gary Pate, the company's director of insurance compliance and risk management, said the criminals target members with large HELOC loans, typically sending the credit union a fax or e-mail requesting a funds/wire transfer.

The requests are frequently for more than $100,000. They call for funds to be transferred to banks in the United States, China and Japan to accounts with the words “Title” or “Construction” in the account name, Pate said.

Even credit unions with strong security in place have been duped, including instances where staffers made call-backs to a secure telephone number. The thieves apparently had made arrangements with telephone providers to have calls to those numbers forwarded to their phones, CUNA Mutual said.

“What's making these scams even more insidious is that the credit union's caller ID indicates the call is going to the member's number of record. Additionally, the fraudsters have detailed member information, which is enabling them to answer additional challenge questions from credit union staff,” Pate said.

CUNA Mutual said it is helping the FBI and Secret Service with their investigation.

The company said it also sent its bond policyholder credit unions a risk alert on Jan. 3, advising them of their responsibilities and offers these recommendations:

- Establish a password system for members prior to accepting funds transfer requests by telephone, fax or mail. Have a written agreement with the member for the use of these passwords. CUNA Mutual said credit unions are allowed to pass on liabilities to the member for any negligent use of their funds transfer password.

- If there is any doubt as to authenticity of the funds transfer request, credit unions are reminded they do not have to perform a wire transfer.

- Beware of large requests for wire transfers that draw against a HELOC, particularly HELOCs that have large available balances and little previous activity.

- Limit the amount of wire transfer that can be completed by a call center employee. Managers should approve all wire-transfer requests.

- Record conversations during the call-back and compare it to previously recorded conversations.

- Listen to the caller. Does he or she have an accent that is inconsistent to your membership?

- Perform an additional verification to the member's work and/or cellular telephone number.

- Additionally, if the credit union has the information, send an e-mail to the member at home and/or work.

Credit union policyholders that have experienced a loss were encouraged to contact CUNA Mutual's Credit Union Protection Response Center at 1-800-637-2676.