MADISON, Wis. – Taking a step which many had anticipated for months, CUNA Mutual Group last week began tightening up its underwriting guidelines for plastic card fraud as its CEO stepped up his call for fundamental changes in basic card technology. Some CUs told the insurer the increased security costs would force them out of the direct credit card issuing business.
Beginning Aug. 1, every CU that carries CUNA Mutual's card insurance will be asked to ensure that it has fraud monitoring and response capability in place 24 hours a day, every day, and to have the ability to recognize high-risk activity and to block transactions.
Credit unions with CUNA Mutual's plastic card coverage reported $89 million in fraud losses in 2005, which represents a 56% increase over 2004 losses, and a 123% increase over those in 2003, said Marc Krasnick, senior vice president with the insurer. 2006 losses are already significantly worse than last year's pace.
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