MADISON, Wis. — A call center supervisor reacting to a CUNA Mutual alert about a sophisticated fraud scheme aimed at home equity lines of credit thwarted a potential loss of $548,000.
Fraudsters apparently using public records and other methods have been targeting holders of large HELOCs for several months, using telephone calls, faxes and e-mails in sometimes convincing fashion.
CUNA Mutual said its staff has issued two e-mail alerts and made nearly 2,700 calls to credit unions about the scheme and said the effort appears to be paying off.
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Gary Pate, director of insurance compliance and risk management, said 43 incidents of actual losses or attempts totaling $8.8 million have been reported to his organization since early January.
One of those included a request that came by fax and phone call for a transfer of $548,000 from a HELOC at $547 million Sierra Central CU in Yuba City, Calif.
Terry Garcia, the CU's vice president of audit and compliance, said the call center supervisor told the staffer taking the call to get as much information as possible from the caller, and the transfer was denied.
"The alert from CUNA Mutual was what made her so cautious," Garcia said. "This transfer request fit the description of what we'd been told to watch out for."
CUNA Mutual convened a team of 27 field risk managers and home-office staff to begin calling the 2,650 or so credit unions in its Credit Union Bond program after reports of the scam, including several successful hits, began circulating a few months ago.
Targeted at holders of HELOCs of $100,000 or more, the fraudsters were deploying a particularly pernicious approach to tricking credit unions into making wire transfers from the accounts.
"Part of the scam's strategy was to confound common fraud-prevention procedures, such as callbacks to verify members' identity," Pate said. "Those calls appeared to be going to members' phone numbers, but in fact were forwarded to the phones of the fraudsters. The perpetrators also had personal member information that enabled them to answer additional challenge questions used to verify
identity."
Now, Pate said, "The good news is we haven't had a reported claim from this scam since Feb. 6."
But, he added, no arrests have been made, and the fraud attempts can be expected to continue. "Credit unions need to continue to remain vigilant and follow specific security procedures to prevent this type of fraud."
Sierra Central CU is doing just that.
"We no longer rely solely on callbacks to members for verification," said Garcia, the audit and compliance vice president.
CUNA Mutual also is urging its policyholders to continue to use its RISK Alerts for timely information on fraud attempts and loss control and to report all fraud attempts and any losses to its Credit Union Protection Response Center at 800-637-2676.
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