UICCU Achieves 16 Percent Decrease in Fraud Write Offs in 2011
Kelly Moore (for TMG)
Des Moines, Iowa, March 1, 2012 – With guidance from the fraud and risk management team at The Members Group (TMG), University of Iowa Community Credit Union (UICCU) has made significant changes to several of the credit union’s credit card fraud prevention strategies over the past three years. In 2011, the changes paid off, contributing to a more than 16 percent year-over-year decrease in fraud write-offs for the $1.4 billion credit union.
The 90,000-member cooperative also achieved significant per-case decreases in 2011 as compared to 2010. Year over year, the credit union has seen a 27 percent reduction in gross fraud per case and a 41 percent reduction in fraud write-offs per case.
According to Chris Carlson, UICCU credit card manager, adjustments to the credit union’s zip code, travel, compromise and country code strategies are mostly to credit for the fraud reductions.
UICCU’s zip code strategy – a custom Falcon strategy employed by the team at TMG – calculates the number of miles between a retailer and a cardholder’s home address. If a transaction is too far away from home and falls into a high-risk merchant category, it will be stopped in real time.
“The zip code strategy implemented through Falcon is a big help to minimizing our fraud losses,” said Carlson. “When we see a fraud trend we’re concerned about, we’re able to work with TMG to make tweaks here and there. But for the most part, the strategies set by TMG specifically for UICCU work well in preventing big fraud losses.”
Many members of UICCU travel frequently, and that travel often includes international destinations. Because member service is paramount at UICCU, the credit union had employed what Carlson calls “relaxed strategies” in the past to minimize the chances its frequently traveling cardholders would experience declines while away from home. Over time, the process exposed the credit union to an unacceptable amount of risk.
As a solution, TMG developed a custom travel strategy for UICCU. Instead of removing blocks from a traveling member’s account entirely, red-flag transactions are routed to TMG’s in-house work center so a live fraud analyst can review the case individually.
Carlson reports that the accounts of UICCU’s traveling members, particularly those associated with the credit union’s corporate clients, perform much better with the new procedures and custom strategies in place.
The credit union also made changes to its compromised accounts procedures. Rather than automatically adding compromised accounts to Visa and Mastercard warning bulletins – an action that would prevent UICCU credit cardholders from using their cards – UICCU’s credit card team reissues new plastic. This allows the account to remain open for several days to prevent a gap in service for the member.
“Whether or not this is the best approach is debatable among credit unions,” admits Carlson. “For us, the cost savings, and more importantly the uninterrupted service to our members, far outweighs the slight additional risk by not listing the cards in the warning bulletin.”
The credit union made changes to the procedures for blocked country codes, as well. The main point of differentiation between UICCU’s current country code strategy and those of the past is the length of time the countries remain unblocked today. If a member is traveling to a blocked country, the credit union will ask TMG’s fraud and risk management team to lift the block – but only for the least amount of time possible.
TMG’s Karen Postma, senior cards risk manager, believes UICCU’s 2011 fraud reductions are due in great part to the credit union’s commitment to fraud prevention. “It’s obvious in every interaction we have with UICCU they want to do the best for their members,” said Postma. “They are an active and involved partner.”
University of Iowa Community Credit Union is a community chartered financial cooperative serving more than 91,000 members living or working in Eastern Iowa. It was established in 1938, and has grown to $1.5 billion in assets with 10 branch locations. It has been consistently recognized by Callahan and Associates as the top credit union in the country for total return to the member. For more information, visit www.uiccu.org.
The Members Group (TMG) is dedicated to creating customized, technology-driven card processing and payment solutions for credit unions and community-based financial institutions across North America. Innovations in fraud management, loyalty programs, alternative payment systems and analytic reporting, and the competitive advantages they create, have helped TMG forge a new standard in offering cutting-edge credit, debit, ATM, prepaid card products and a P2P payment solution. For more information, visit www.themembersgroup.com.