ST. PETERSBURG, Fla.—After reporting it saved its member credit unions $277 million in fraud losses last year by stopping attacks before they ever occurred, PSCU believes it can move that number even higher in 2020 with linked analysis and data sharing.
“Fraud is one of the hottest topics credit unions want to discuss every time we walk into their offices,” said President and CEO Chuck Fagan. “We saved credit unions throughout the year $277 million—across cardholder usage, account takeover, fraud attempts coming into the call center… across all channels. Crooks are not willing to take a pay cut, so we have to keep our protections very strong.”
Fagan emphasized the CUSO will continue strengthening defenses across all channels.
“No one tool is going to do the job,” he said. “So it’s using defenses around authentication, using systems like Pindrop that will continue to make a huge difference. We are always communicating to our call center reps when a call coming in is detected to be possibly fraudulent—that’s a tool we have invested heavily in—we call that linked analysis.”
The Next Step
Fagan said linked analysis is similar to what consumers see on their cell phones that have technology to warn them when an incoming call is likely to be spam, but instead the warning here is the call is possibly from a fraudster.
“With all of the massive data breaches that have occurred, criminals have quite a bit of information on consumers,” noted Fagan. “They reach out to call centers and try to break through and get you to answer their calls.”
Fagan said the next step for the company is connecting back with credit unions, getting them to share their data to further strengthen defenses.
“Credit unions have their own call center and branch networks, so they have separate interactions and intelligence that we can mutually benefit from,” Fagan said. “If we can connect those dots… For example, crooks walk into branches and try to do account takeover, and they call the credit union’s call center. In many cases we don't have access to that data. However, now we do with linked analysis. We can build that data intelligence into our systems to make them smarter and maybe push that $277-million savings even higher.”
No One Defense
Fagan reiterated what lead to the $277 million in fraud savings for its credit unions was not due largely to any one defense technique.
“We are going to continue to invest in fraud detection and prevention tools and in training,” said Fagan. “We don't think there's any single silver bullet that's going to stop this, so we’ve got to have a broad attack plan.”
Looking ahead at the fraud landscape for 2020 and beyond, Fagan said fraud will just continue to evolve.
“Crooks will shift to wherever they think they can get the most money,” he said. “I think a big piece of our effort this year is we have to recognize the fact attacks are shifting to the card-not-present channel. The fraudsters have become so active here—they're using the same tools we use to defend, such as artificial intelligence and machine learning. We’ve got to stay ahead of those guys. I don’t think we’re going to see fraud numbers slow down, and they will just continue to climb.”
Fighting Card Fraud
Turing to credit card usage, Fagan said PSCU is pleased to see credit unions getting on board with contactless plastic—a payment method Fagan strongly emphasized during an interview with CUToday.info in 2019 needs to be adopted by credit unions to remain relevant with members and to keep cardholders in the fold.
“We’re seeing continuing adoption of contactless plastic by our credit unions, and we are very glad to see that,” said Fagan. “Credit unions making this shift are ensuring their members have a great payments experience and are remaining competitive.”
Fagan said PSCU is dedicating significant resources to assisting CUs with issuing contactless plastic.
Chuck Fagan
“But we would like more of them to mass reissue, instead of just reissuing when cards expires,” said Fagan, who said the CUSO just issued 50,000 more contactless cards, taking the number of PSCU credit union contactless cards to well over three million.
“Contactless cards are so important for credit unions now,” said Fagan, noting how the major card issuers have all turned to the technology. “Your members are seeing customers ahead of them in the checkout line, tapping their plastic. If they don’t have these tap-and-go cards, they’re wondering why their credit union has not issued them.”
Stepping Up Other Efforts
Fagan added PSCU is stepping up its efforts to keep cardholders in the “digital channel.” He explained credit unions force members out of the digital channel when they issue a new credit card and then ask them to call in to activate it.
“Instead, the next time a cardholder logs into digital banking we ask them if they want to activate their card right then,” said Fagan. “Now you’ve kept that member in the channel they prefer, which with a growing number of consumers—especially younger generations—is digital.”