18 THE NAFCU JOURNAL January–February 2023 Fraud monitoring throughout the financial system proved challenging in 2020 and 2021 as economic programs designed to provide relief and stimulate the economy were rapidly deployed. While programs like enhanced unemployment payments and the Paycheck Protection Program are no longer providing targets for fraudsters, the aftermath of pandemic-era behavior has created new challenges. “One of the lasting effects of the pandemic is the comfort level with online transactions for all of our members,” said Stephanie Painter, BSA manager at DuPont Community Credit Union. “Even though foot traffic in our branch offices is back to normal, we have seen a significant increase in members who are using online services on a more regular basis.” The number of members using online services not only grew at DuPont, but the credit union also grew, which meant new members and an increased volume of online transactions, said Painter. “These increases mean a greater need to monitor online activity.” “NAFCU’s compliance team has noticed an increase in the number of fraud questions we receive,” said Nick St. John, director of regulatory compliance at NAFCU. “We help members interpret the regulations for different types of fraud by researching their issue and for Lafayette Federal Credit Union. A synthetic identity account is “grown” over time, using a name with a different social security number and different birth date. “The profile is created, then applications for credit or small loans are made until eventually an institution takes a chance and gives the applicant a loan,” she explained. Once the small loan is paid, applications for more credit are made with more institutions approving the applications based on the payment history. “It takes about two years to grow an identity and acquire the large dollar loan or credit line that is the fraudster’s goal.” Even traditional identity theft has become more complex to monitor, said English. “Most identity theft fraud is a result of a data breach, but criminals know that organizations provide one year of monitoring to victims of the breach, so they sit on the information for one to two years before using the “ NAFCU’s compliance team has noticed an increase in the number of fraud questions we receive. We help members interpret the regulations for different types of fraud by researching their issue and providing sources of information to help them comply with those regulations. ” NICK ST. JOHN, DIRECTOR OF REGULATORY COMPLIANCE, NAFCU providing sources of information to help them comply with those regulations.” The types of fraud questions have included everything from fraudulent checks to Zelle or other third-party payment providers to romance scams, said St. John. Some scams, including the tech support scam, are difficult for credit unions and their members. When members willingly give their information to the fraudsters, they are responsible for the loss, but credit unions don’t want to be in the position of either writing off a significant loss or potentially losing a member. “These type of scams are a loselose situation for both the credit union and the member,” he added. In addition to more traditional identity theft, where a criminal obtains the information necessary to take over another person’s account, synthetic identify theft poses special challenges for financial institutions, said Lynn M. English, senior vice president of risk management
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