One of my family members recently experienced debit card fraud where a scammer stole her card information and went on a $5,000 shopping spree in the span of an hour and a half. How the scammer got ahold of her information is unknown, but she quickly contacted her credit union to notify them so the necessary steps could be taken to prevent the scammer from making additional purchases on her account. Her credit union incurred the loss, increasing her loyalty to the brand. Meanwhile, her credit union’s bottom line took a $5,000 hit…but it could have been even more had the fraud not been detected within 1.5 hours of use.
According to Cardhub.com, credit and debit card fraud resulted in $16.31 billion worth of losses in the U.S. in 2014. Card issuers and merchants incurred 62% and 38% of those losses- the issuer losses occurring mostly at the point of sale from counterfeit cards and the merchant losses occurring mostly on card-not-present transactions.
While many credit unions are now switching to EMV chip cards, cybercriminals are getting more creative and continue to scam consumers at an alarming rate. That said, here are some proactive ways to combat debit and credit card fraud:
- Offer transactional alerts. Many credit unions now provide members with the opportunity to set up alerts such as email, push notifications and/or SMS. My own personal alerts on my checking account, for example, are set up to send me an immediate push notification with every transaction made. This offers a value-add to members while positively impacting the credit unions’ bottom lines. The member receives peace of mind in knowing that if their debit card is compromised, they will be notified right away. In turn, the credit union is able to freeze the account in a timelier manner, mitigating the risk of larger account refunds.
- Encourage members to go paperless. A recent article on Mashable entitled “How to halt credit card fraud this holiday season” discusses the impact of forgoing hard-copy statements in favor of online access to accounts. Signing up for paperless statements eliminates the possibility of credit union account information being stolen straight out of your members’ mailboxes. This is a two-fold effort with existing members, as well as new accounts opened. With existing members, a good practice would be to segment those who are still receiving paper documents and then communicate the benefits of going paperless on those members’ transactional documents. The approach CSRs should take with new accounts is to communicate on the front end the benefits of eAdoption. Aside from mitigating risk of fraud through the mail stream, some of the other advantages to the member are as follows:
Online Archival: Online document history availability is a great eAdoption motivator. Viewing at least 18 months of history online will provide members with important information as they prepare tax returns and other financial documents. In addition, providing document history reduces member service calls regarding inquires for past statements.
Sustainability: According to Business Wire, one out of five members has stated that green initiatives cement the bond they have with financial institutions. Furthermore, 43% of members say they are more likely to do business with organizations that are green. Sustainability can be communicated through member-critical communications- whether print or electronic- by utilizing well-placed colorful eAdoption messaging.
- Set members up with two-factor authentication. Many of you are familiar with two-factor authentication, which is a security measure that requires more than a member’s username and password to gain access to accounts. As cybercriminals continue to find ways to scam your members, two-factor authentication is necessary. How you implement it, however, is even more important. Be sure that you communicate with members that the while this will help protect them from cybercriminals, they still should be mindful of any phishing emails or texts that appear to be from your credit union.
While these solutions are not 100% foolproof, utilizing them will help decrease the amount of fraudulent charges to your members’ accounts, increasing their loyalty to your brand and improving your bottom line.