3 Ways to Best Protect Members From Fraud

The payments industry has invested a significant amount of time and resources enabling EMV over the past several years, and the effort has paid off. Visa announced last year that chip-enabled merchants nationwide reported a 43% reduction in counterfeit card fraud annually. There has also been significant progress at ATMs, as MasterCard's liability shift passed last October and Visa's comes into play this month. As more protections are put on these machines, it becomes harder for criminals to steal useful, sensitive consumer information, leading to a decrease in skimming at ATMs.

No matter how often you hear negatives around EMV, the fact is that it's working. In other areas of the world where EMV was in place long before it was introduced in the United States, counterfeit card fraud has been reduced significantly. Even the U.S. is now reporting a significant decrease in counterfeit card fraud. However, because ATMs and the point of sale no longer offer paths of least resistance for fraud, fraudsters have decided to carry out their attacks on a more vulnerable avenue: Card not present transactions.

CNP transactions lack the protection of EMV and other security measures, making this method an ideal target for these thieves. According to CardNotPresent.com, CNP fraud rose 79% in only three years following the EMV liability shift in the United Kingdom. In the U.S., CNP fraud rose 31% during the 2016 holiday season when chip cards were already in wide circulation.

The rise in CNP fraud puts members and credit unions at risk, so all should take action to help combat this threat. Educating members, paying attention to emerging technology and working together as an industry are three steps credit unions can take to better protect members, while also strengthening overall member relationships.

Educate Members

Member education is one key to fraud prevention. Even though credit union executives and many employees are typically well versed in fraud prevention, members sometimes aren't even aware there is a problem at all, let alone armed with knowledge about how to best prevent and respond to attacks.

Fortunately, there are a number of tools available for credit unions to use when educating members about fraud. Through meaningful conversations with members, credit unions can outline the avenues of CNP fraud and detail how to better prepare against a future attack. Whether your credit union mails members a newsletter, distributes blogs or engages in social media, you should find an effective way to share relevant information about fraud scenarios and prevention best practices.

Video can be a great channel to reach members, especially among millennials and Generation Z. These so-called "digital natives" have the capacity to balance between multiple screens, but have a shorter attention span, making lengthy articles a poor choice for sharing information with them. In fact, a study by AdWeek found 95% of Generation Z uses YouTube on a regular basis. By leveraging video, credit unions can share relevant messages to this audience, including how to protect yourself against fraud and what to do if your information is breached, all through a more dynamic, personalized outlet.

Not only does this strategy give members a better understanding of fraud warning signs and best prevention practices, it can also strengthen their loyalty toward the credit union that provides them with this information. Consumers will choose institutions that offer better security.

Pay Attention to Emerging Technology

It is also important to be mindful of new technologies that can be used to a member's advantage. EMV readers for mobile phones have become increasingly popular over the past few years, adding an extra level of security and authentication for the member while maintaining the convenience and ease of their mobile experience. Credit union employees should be prepared to share information about these technologies with members to help them identify options to better protect their CNP transactions.

Artificial intelligence is another area that could prove useful in the fight against fraud. The speed of AI in accessing and analyzing natural language or member data makes it easier for credit unions to detect unusual patterns and be proactive in protecting the financial health of the member. Implementation of AI fraud detection applications makes it possible to detect and mitigate fraud in real time, easing concerns for members while preventing devastating blows to a credit union's reputation or bottom line.

Work Together as an Industry

No matter what type of financial services provider an organization is – whether it's a credit union, bank or alternative provider – fraud is a common enemy to all. This is why every player in the industry should work together to provide consumers with tools to minimize their exposure to fraud. Whether this includes getting involved in an industry organization, attending industry conferences or simply talking with another credit union down the street, there is strength in a united front.

Even though fraud will likely never be universally eliminated, there are many steps credit unions can take to minimize their exposure to fraud, and to prepare themselves and members for possible attacks. Through tactics such as pushing relevant information to members in a meaningful way, keeping up with new technologies, and collaborating with other industry players, credit unions can be successful in keeping members' sensitive information and funds as secure as possible.