As fraudsters continue to evolve and adapt to changing consumer behavior, having a multi-layered strategy is more important than ever. It’s not just about lowering the number of incidents – fraud prevention has become a vital component of the member relationship. It reaffirms to your member that you are keeping them and their money safe at all times.
In 2020, we saw digital payments skyrocket as a result of COVID-19. With that came a surge in card-not-present (CNP) fraud across digital and eCommerce transactions. Looking at our own card portfolio, CNP fraud accounted for almost 90 percent of fraud losses in 2020.
For most financial institutions, the knee-jerk reaction to this trend might be to ramp up fraud prevention methodology, enforcing stricter rules on flagging potentially suspicious transactions; but doing so can quickly increase your false-positive rate. A member may quickly become frustrated if he/she has a transaction declined at the point-of-sale because his/her credit union is being extra cautious.
How do credit unions effectively battle this new wave of CNP fraud without negatively impacting the member experience? Here are a few ways we would recommend:
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