Fighting Fraud Early and Efficiently
Posted by Sharon Begarney, CUDE,NCP, VP - Item Procesing Support Services, Catalyst Corporate FCU on 8/31/2017

Have you ever lost a $20 bill? It’s frustrating. You work hard for that money! Now, imagine losing $26 billion – roughly 1.3 billion of those bills – in one year. That’s the total financial loss attributed to identity theft in 2014 – 35 percent of which stemmed not from credit card fraud, but from existing bank accounts.

Is this something that should worry credit unions? Yes. Is there a way to mitigate these losses? Also, yes. Financial institutions should always remain vigilant when it comes to fraud prevention, but there are ways to efficiently manage the process – most notably, with a real-time deposit fraud protection service.

Real-time fraud protection services, such as Early Warning Deposit Chek, issue instant alerts – at the time of deposit – on checks that carry return risk. Alerts rate the level of risk and identify the reason for flagging an item, such as recent NSF history, stop-payments, closed accounts and lost or stolen checks.

How can real-time protection services benefit credit unions?

They Save Money. According to fraud data collected by the Fed in 2012, (results from the 2016 study will be available later this quarter), nearly a million unauthorized fraudulent checks were paid that year. The total value of those checks totaled more than $1 billion, with an average value of $1,272 per fraudulent check payment. With timely notification, potential losses like these are preventable.

Real-time fraud protection can also decrease deposit losses when financial institutions nationwide share account information. By collaborating, institutions can learn from others’ bad experiences regarding check deposits originated on lost or stolen check stock, on closed accounts or on accounts with insufficient funds.

They Save Time. What’s the rush? With real-time fraud protection, taking a few extra moments up front can save a significant amount after the transaction. With immediate notification of status, real-time protection lets tellers know quickly whether a transaction is valid or at risk. This happens while the member is still at their station – not the next day, after the check has a chance to clear.

Additionally, credit union staff reviewing transactions from other deposit channels can take action on high-risk deposits. There is no waiting period or labor associated with processing chargebacks and recovering funds. Deposits that can’t be collected don’t receive approval. It’s as simple as that.

They Save Face. Credit unions want satisfied members. Preventing fraud in a timely and cost-effective manner helps members avoid returned checks and the potential for overdrawn accounts and overdraft fees. For credit union employees, it doesn’t get much better than assuring members that you’re doing everything you can to protect their accounts from fraudulent activity.

Investing in a real-time fraud protection service helps protect your members – and your credit union’s bottom line.


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