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CUMIS: HELOC Wire Transfers 'Red Flag' For Fraud
HIGHTSTOWN, N.J. (2/15/13)--Fraud targeted at credit unions--including wire/home equity line of credit (HELOC) fraud, online banking fraud and data breaches--continues to increase, according to CUMIS Insurance Society Inc., the property and casualty company of CUNA Mutual Group.

Credit unions at the New Jersey Credit Union League headquarters, shown here, and at two remote areas discuss--via videoconferencing--emerging areas of fraud with Carlos Molina, risk management consultant at CUMIS Insurance Society Inc.  (Photo provided by the New Jersey Credit Union League)
Any wires funded by HELOCS should be a big red flag, said Carlos Molina, risk management consultant in Credit Union Protection's Risk Management Division at CUMIS. Molina spoke before a group of New Jersey credit unions Tuesday at a special roundtable on emerging fraud issues. The meeting was held at the New Jersey Credit Union League's headquarters in Hightstown, with some participants at two remote locations (The Daily Exchange Feb. 14).

Credit unions, as member-focused service providers, are considered easier prey because they often sacrifice security to provide service, he told the group.

Most credit unions' wire policies usually contain step-by-step instructions on how to perform the wire transfer but don't include verification procedures.  Molina suggested increasing standard verifications since it is easier to access personal information online. The standard name, account number and last four digits of a Social Security number are not enough to positively identify a member over the phone, he said.  Credit unions should take extra caution with fax requests and call backs.  It is too easy for fraudsters to forward phones and fool financial institutions further, he added.

Molina also cautioned credit unions about the type of transactions members can perform using audio response functions.

In reviewing online banking fraud, he cited examples of scams, including phishing, man-in-the-browser attacks and more, and offered recommendations for minimizing the risk.  In discussing data breaches, Molina said a breach can result in more than loss of data; it can also damage the credit union's reputation, and cause financial, compliance and legal risks.  He advocated having more business controls in place and training staff and members on personal safety.

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