Chairmen Advise Credit Unions to `Think Like a Criminal' to Combat Fraud

SAVANNAH, Ga. – The growing cases of identity theft and the continuation of internal crimes have forced credit unions to add even more layers of prevention policies and member education resources. At the National Association of Credit Union Chairmen’s Roundtable Forum here, attendees shared their perspectives on specific fraud cases they’ve encountered. Effective fraud policies ideally address each facet of what is involved in risk, NACUC suggested. Participants at each of the roundtables were asked a number of fraud policy questions such as are frequent audits performed and what kind of damage control plan is in place if a member’s account has been compromised. One chairman said its credit union “got burned” by an employee sent from a temporary personnel agency who had dipped into some dormant accounts. Another California credit union happened to have the city’s chief of police on its board who spotted some questionable activity prompting the credit union to develop more extensive background checks on future employees. Identity theft, phishing, check fraud and bogus ATM deposits topped the fraud list for attendees at one roundtable. As a result, internal and external audits have kicked into overdrive with many paying as much its costs to prevent losses. Still, with the extensive list of theft measures credit unions have implemented over the years, diligence still means staying one step ahead of the criminal. “Hackers are way ahead of the curve,” said Ed Blommel, chairman of $1 billion Wright-Patt CU, Inc. “You have to think like a criminal. We’ve seen checks that look absolutely perfect. People are ingenious.” Some of the fraud policy basics include identifying methods to find and fix weaknesses; educating members on how to protect themselves; and ensuring that everyone from board to staff are aware of current policies in place, said George “Bill” Cauley, chairman of Florida Telco CU, who served as the roundtable’s facilitator. The rapid increase in fraud cases has caused some chairmen to be leery. Even as more members are going online to do the bulk of their financial transactions, some board chairmen are still not completely sold on the idea. “I’m old school,” one chairman of an Iowa credit union quipped, as nearly half of the 10 participants at a NACUC fraud policy roundtable here agreed in unison. One New Jersey CU chairman said many of its CU members are scattered around the country so online banking works for them, but he stopped short for himself saying he’s still “skeptical.” “Our CEO is trying to convince everyone to go electronic” but it’s been a hard sell, said another chairman from Delaware. -