NAFCU Services Blog

May 02, 2016
Categories: General

Card Fraud Lessons Exposed

By: Ann Davidson, VP of Risk Consulting at Allied Solutions

Recently Allied Solutions presented a webinar on card fraud in response to the reported increase in card fraud attacks. When polled, 81% of attendees stated they have personally experienced an uptick in card fraud during the last 12 months.

After this webinar, Allied reached out to individual financial institutions to perform an assessment of their risk programs and help uncover potential causes of the card fraud they were experiencing. Here’s what they found:

  1. Financial institutions were seeing increased instances of PIN fraud at the ATM.

Discoveries:

    • A fraud monitoring system (FMS) was not in place for PIN authorizations performed at an ATM.
    • All employees were granted the authority to change ATM PINs when requested by a caller.

    Preventive Actions:

      • Confirm in writing from your PIN vendor that you have a FMS in place for all types of authorizations.
      • Ensure PIN change requests are performed using robust authentication measures, especially if you have a voice response unit (VRU); do not give your employees the authority to manually process PIN changes.
      • Review your PIN change reports to see if there is a notable increase in PIN changes.
      1. Financial institutions were seeing high daily dollar amounts on card transactions.

      Discoveries:

        • Credit card limits were set at the line of credit for a 24-hour timeframe.
        • Debit signature limits were set to the available balance in the cardholder's account.
        • Debit PIN limits for POS and ATM were set at $1500 and greater.

        Preventative Actions:

          • Confirm you have daily dollar limits for ALL types of transactions.
          • Set your daily dollar limits to suit your organization’s risk appetite and tolerance.
          • Ensure daily dollar limits are set to accommodate the spending activity of your account holders.
          • Let your cardholders know they should inform your organization if they want the daily dollar limit raised to better accommodate their transactions.

        The discoveries that were made after communicating with these financial institutions demonstrate the importance of ensuring you have strong security measures in place to help prevent fraud attacks, while at the same time verifying the strength of your card processors’ and vendors’ security layers.

        Watch the recording of Allied's Card Fraud on the Rise: How Financial Institutions Can Help Prevent It webinar, co-presented by Ann Davidson and Tammy Behnke, Program Executive at ProSight Specialty Insurance, to hear more about how you can remain more protected from card fraud.

        Hear more about security breaches and learn what your financial institution can do to help prevent and respond to breaches by attending Allied's upcoming webinar Data Breaches Continue to Rise: How Financial Institutions Can Prepare & Respond on May 4. Click here to register.

        Allied Solutions is the NAFCU Preferred Partner for Insurance—Bond, Creditor Placed (CPI), Guaranteed Asset Protection (GAP), and Mechanical Breakdown Protection (MBP); and rateGenius. Learn more at www.nafcu.org/allied.

        About the Author