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 reducing the number of incidents, because fraud prevention has also become a vital component of the member relationship. It reaffirms to your members that you are keeping them and their money safe at all times.
For the past few years, we’ve seen digital payments skyrocket as a result of COVID-19. With that has come a surge in card-not-present (CNP) fraud across digital and ecommerce transactions. Looking at our own card portfolio, CNP fraud accounted for almost 82 percent of fraud losses in 2021. Internationally, that number is even higher, reaching 95 percent.
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. Members may quickly become frustrated if they have a transaction declined at the point-of-sale because their 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 recommendations:
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