Side effect of COVID-19: Fraud is on the rise; NCUA issues risk alert

The National Credit Union Administration (NCUA) recently issued a risk alert (20-RISK-02) informing credit unions of the heightened risk of fraud amid the COVID-19 pandemic. The emergency situation we have been facing for over five months now, required the implementation of new or expanded government programs to aid consumers, such as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Scammers are taking advantage of such opportunities and are defrauding consumers.

Though the alert, NCUA outlines the increased risks credit unions are facing associated with routine operations, summarizes red flags identified in fraud schemes related to CARES Act programs, and provides resources to report fraud to the most appropriate authorities and member education tools. This blog provides a summary of the most relevant points covered in the risk alert.

Financial Institution Fraud

This type of fraud includes new account fraud, identity theft, cybersecurity, risks, imposter and money mule schemes, and mobile banking application fraud. Because of the pandemic, most financial institutions have increased their digital presence and the scope of member’s remote access. Shifting from face-to-face to mainly providing products and services virtually have helped members during these difficult times, but as a side effect it has also created vulnerabilities scammers are trying to exploit. The NCUA encourages credit unions to monitor information about trends being released by federal agencies as they are identified “to remain vigilant and aware of the rapidly changing nature of these schemes.”


continue reading »