Fraudsters no longer come through your front door—they come through your phone. We recently sat down with Greg Olmsted, President and CEO of North Alabama Educators Credit Union for our T.I.P.P.S. podcast. Greg has dedicated 38 years to the credit union industry, serving in his current role since 2003. He shared tips on what his credit union has done to help fight fraud including partnering with their community to raise awareness and provided tips on what others can do to protect consumers.
The growing fraud concerns for credit unions and their members
We all know that fraud is a growing concern for everyone, and credit unions and their members are no exception. Recent statistics reveal that over $10 billion was lost to fraud in 2023 alone. Olmsted shared insights into what his credit union is experiencing and how they are addressing this critical issue.
"Unfortunately, fraud is something that our members are seeing on a daily basis, and as a result, we’re also dealing with it everyday. Our job is to protect our members’ money. We’re seeing more and more attempts to separate members from their funds, and we’ve placed a premium on making members aware of the scams out there. Our goal is to detect these issues before they happen, keeping our members from losing their hard-earned money," said Olmsted.
Understanding the predominant scams
"The biggest issue we see right now is romance scams. It's heartbreaking because these scammers prey on people who are often lonely, sometimes widows or just single individuals looking for companionship. These scams can go in different directions, but we often see situations where scammers get members to give them access to their online or mobile banking for the purpose of depositing checks. The members believe they are helping someone they care about, but they end up losing money instead."
The impact of romance scams
Romance scams are devastating. We found that one in four Americans falls victim to this type of fraud, which is a staggering statistic. Greg shared a specific case that highlights the impact of these scams.
We had a member who was involved in three different romance scams over eight years, losing around $420,000. It wasn't just one person; it was three different scammers. Despite losing money multiple times, she still hoped for the best each time. It’s really heartbreaking."
Proactive tips to combat scams
To fight scams effectively, it’s important to have a proactive approach. Here are some strategies that credit unions and their members can adopt:
- Educate members regularly: Education is the first line of defense against fraud. Credit unions should host workshops, webinars, and community events to raise awareness about common scams. Use newsletters, social media, and email campaigns to share real-world examples and tips on recognizing fraudulent activities.
Greg’s team uses a variety of channels to keep members informed, including social media and email updates. They’ve also created a 10-minute fraud awareness video to help members recognize common scams. Education is crucial because the more informed members are, the less likely they are to fall victim.
- Implement a fraud awareness checklist: Develop a checklist that members can refer to when making transactions, especially large ones. This checklist should include red flags such as unsolicited requests for personal information, the urgency to act, and unfamiliar or suspicious senders.
Have a comprehensive fraud awareness checklist to provide to members, especially when they’re making large transfers. It asks questions like, ‘Do you know the person you’re sending money to?’ and ‘Have you ever met them in person?’ This helps members pause and think critically before proceeding.
- Enhance security measures: Encourage members to use multi-factor authentication for their accounts and regularly update their passwords. Credit unions can also enhance their internal security protocols by monitoring transactions for unusual activity and using advanced AI-based fraud detection tools.
Implement stricter security measures, including enhanced monitoring of account activities and encourage members to use multi-factor authentication. It’s about building multiple layers of defense.
- Create a strong support network: Build partnerships with local organizations, law enforcement, and community groups to tackle fraud collectively. Regular meetings and information sharing can help credit unions stay ahead of emerging threats.
Meet monthly with local law enforcement and other financial institutions to discuss current fraud trends. This collaboration has been invaluable in identifying and responding to new types of fraud quickly.
- Promote a no-blame culture: Encourage members to report suspected fraud without fear of judgment. Assure them that they won’t be blamed for falling victim and that the credit union is there to help. A supportive environment makes members more likely to come forward, enabling faster responses.
Greg’s team works hard to create an environment where members feel safe reporting any suspicious activity. They reassure them that "we're here to help, and it’s not their fault."
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Additional resources for credit unions:
Video to members:
Fraud alert poster (use as a checklist to members): https://www.fbi.gov/file-repository/fraud_alert-2.pdf/view
Cybersecurity tips: https://naecu.org/downloads/2023%20Cybertips%20NAECU.pdf