NAFCU Journal March April 2021

30 THE NAFCU JOURNAL March–April 2021 INSIDE NAFCU SERVICES I t seems as if new forms of fraud are always creeping up before we’ve even begun to contain the old ones. 2020 brought a whole new set of chal- lenges for credit unions and at the top of that list for many was accelerating digitization and contactless options, while combatting the increase in related fraud attempts. To better understand this struggle and find out what tools credit unions can be leveraging in 2021 to stay ahead of new forms of fraud, I spoke to General Manager of Fraud at FIS, Eric Kraus. We talked about why more data means less fraud and friction for your members, the most prevalent forms of fraud to prepare for, and key fraud pre- vention strategies to keep that precious data secure. Here’s what he had to share: Randy: The last couple years have been turbulent, to say the least. So what’s the most prevalent form of fraud that’s been kind of rocking the boat lately? Eric: Very clearly, whether you think about cards and payments, I would say there’s been a material rise in card-not- present fraudulent activity. We had already seen this trend kind of coming into the year, even if you want to think pre-pandemic. The point-of-sale channel or the card-present channel had been locked down pretty well with the EMV in chip cards. We’ve seen high levels of adoption now both on the merchant side as well as in the issuing community. So, you know, we’ve done a really good job in what I would say was the bigger problem in history, which was the counterfeits and a lot of the point of sales…And then digital apps, the payment apps are popu- lar. Sometimes people don’t always think of those. But you’re typically loading in card information as the funding source within some of these apps, so we see those as a card-not-present transaction as well. And when I talk about pay- ment app, we’re talking about Zelle and Venmo and Cash App and those type of applications that have become very, very popular, certainly through the pandemic. Randy: What are some of the earliest, or maybe easiest to recognize, red flags that can alert a credit union of some of these types of fraudulent transactions? Eric: I mean, this is really where a robust data strategy pays dividends for you at the credit union. Consumer behaviors have changed quite a bit, and do you have a full understanding of even what the new normal looks like? It’s important to understand a baseline before you can really understand if something out of the ordinary is happening. And when we talk about data strategy, it’s aggregating views into all of your channels—call center, online, in person—some things that can tip you off pretty quickly, are you seeing a rise in the type of requests that you don’t usually see? PIN changes, requests to tokenize my account so I can load it into an app. I mean, making something up: if you typically see 10, 20 of these types ASK THE EXPERT: ERIC KRAUS ON KEY FRAUD DRIVERS ACROSS THE INDUSTRY By Randy Salser, President, NAFCU Services ...[W]hen we talk about data strategy, it’s aggregating views into all of your channels—call center, online, in person—some things that can tip you off pretty quickly, are you seeing a rise in the type of requests that you don’t usually see? ERIC KRAUS, GENERAL MANAGER OF FRAUD AT FIS