CUPERTINO, Calif. – Data seen by Bill Brown, product line manager for Chordiant software, indicates credit card fraud has reached the $1.1 billion level, with a $300 million increase in the past year. Brown figures as credit unions and their card portfolios grow, they're going to take their share of hits. Folded into this are increased demands posed by federal and other regulations. "Credit unions as a whole are going to have some challenges in competing," Brown says. "Many credit unions are relying on two or three major players in the processing world. "At this point, the way companies are differentiating themselves is really coming at the bank level and not at the processor level. Because of that, the smallest credit unions that are more independent and maybe tend to their customers in a kind of one-off process are going to struggle to compete against some of the larger players using software like ours." With banking legislation that is being enacted, Brown continues, it isn't an even playing field anymore. The challenges will grow in the next three to five years. "To meet that," he says, "we will have to see some of the credit unions change their objectives and become less independent and more interested in hosted solutions that can deal with the lifecycle of the debit card or credit card in a way that drives the member experience. "We really need to see a different dynamic out of the credit union market, a cooperative effort to make changes at a group level. The stronger their position can be, whether dealing with regulations or technology, the better the industry is going to be." If I, as a member, protest something on my statement, I seem to be dealing with three forces-the merchant, the credit card company and my credit union. True? The credit union, much like the card issuer, owns the relationship with that member, Brown answers. The credit union should be an advocate for the member in any dispute. But keep in mind the issue will be governed by the Visa or MasterCard association rules. To smooth the situation, the credit union can observe the guidelines, but try to resolve any issues as quickly and efficiently as possible. Disputes often boil down to he said-she said. "In many cases it is simply an argument, if you will, between the merchant and the credit union member. Who can prove what? If a consumer complains they were charged twice, that's pretty easy to confirm and correct," Brown says. "When it's an issue of quality of goods or services, or the consumer's expectations not being met, there are shades of gray. It becomes a question of how well the consumer is defended by their advocate. It can be a wild card as to how it's going to be resolved." Chris Hall, Chordiant vice president/worldwide marketing, indicates Chordiant's chargebacks and disputes software can introduce dynamic decision-making to the desktop by taking into account questions such as: What is the lifetime value of this member? How loyal have they been? How many times have they called in? The credit union can make a wise business resolution based on the decision-making rules built into the software. It enables the member service representative to make a determination rather than waiting for management approval. At the same time, Brown adds, there's no question consumers are getting more savvy. If you simply call in and get something free, why not? Brown worries that too many financial institutions still rely on their best representatives to make a right decision every single time. But one person cannot be there all the time. There needs to be a consistent process. "That is really a very difficult curve to many financial institutions to come out of, to see the need to take the next step and use technology to be the differentiator, not necessarily the individual relationship or the individual representative," he says. Even so, he continues, "Software can only take you so far. You must have a dynamic change in the industry to accept that technology and understand it." Hall indicates that in 2007 Chordiant is going to introduce a collection product that will recognize customer trends and risks prior to delinquency and collection efforts beginning. [email protected]