heloc fraud and credit unions In the latest round of wire transfer fraud sweeping the nation, more than two dozen credit unions have been hit and some have suffered losses ranging from $100,000 to $400,000 in a home equity line of credit scam, according to Roger Nettie, a senior consultant of risk management at CUNA Mutual Group.

The Madison, Wis.-based company issued an alert this week regarding a wave of scams aimed at the accounts.

“HELOC accounts are a very attractive target for thieves,” said Nettie, who has worked in CUNA Mutual's risk management division for almost 30 years.

Cybercriminals used information from public records such as mortgages and social media such as Facebook to pinpoint potential targets and to steal members' identities, gain access to online banking accounts and transfer funds, Nettie said.

“In these latest cases, it usually starts with an account takeover so they can change the member's email or password to get into their online banking and move HELOC funds to their share draft account,” he explained.

Fraudsters posing as members used details they've gained to impersonate members when they called to request a wire transfer, he explained.

To avoid being victimized by the scam, Nettie advised credit unions to exercise extreme due diligence when processing requests for wire transfers and to avoid wiring large transfers unless the member is in the branch.

“They should look for red flags,” Nettie said.

In some recent cases, fraudsters contacted credit unions directly to change member profile information, including addresses, phone numbers or email accounts, he noted.

By transferring funds from the HELOC into a share draft account, criminals try to reduce the chance that a credit union employee would notice suspicious activity, Nettie said.

Some recent wire requests received by fax included accurately forged signatures, which the fraudsters found on the HELOC documents they searched out online, he said.

In some instances, member phone numbers were call-forwarded by the criminals or callbacks by the credit union were forwarded to the criminals, CUNA Mutual said.

“Some of the credit unions that have been hit have compared information and some of the voices on the callbacks sound like the same person, the same accent, so it does seem to involve fraud rings,” Nettie said.

Not taking steps to prevent wire fraud can be a costly mistake.

“It is important for credit unions to understand any requirements for coverage under their insurance program,” Nettie said. “Some carriers require written wire agreements, recorded phone lines or callbacks to specific phone numbers.”

“CUNA Mutual moved from a callback requirement to a co-payment for risk sharing, to discourage large dollar requests not in person, or encourage other layers of security,” he explained. “Credit unions are generally responsible for retaining 50% of losses over $25,000 for requests not received in person.”

Losses related to wire transfers have remained on CUNA Mutual's radar for 20 years, Nettie said. The company experienced its first wire transfer loss of $250,000 in 1994, he added.

Wire transfers related to HELOC accounts began pelting credit unions in 2006 with the most recent blip showing up on the screen a few months ago, Nettie said.

Instant Insights /

Credit Unions Take $400K Hit in HELOC Fraud Case

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