The Members Group, a payment processing CUSO affiliated with the Iowa Credit Union League, is cautioning credit union card issuers to be on the look out for a kind of card fraud which the CUSO says is becoming more popular.

The fraud type has traditionally been called “sleeper” fraud but has also become known as “bust out” fraud. In this type of fraud, a person applies for a credit card with false information and then uses it responsibly for a time to build up a bigger credit line before using it wildly and disappearing.

“The issuing financial institution (FI) relegates the account to its collection team, which is unsuccessful in its attempts to recover the balance due,” wrote Karen Postma, senior card risk manager for TMG in a white paper addressing the phenomenon. “The result? The loss is never classified as fraud and the perpetrator moves on to the next FI victim.”