Community Bankers Association of Illinois

Fraud Alert – Increased Fraud Activity Detected
10/29/08

Recently, several CBAI member bankers have reported an increase in card fraud. The fraud has taken place on both Visa and MasterCard credit and debit accounts. Discussions with EFT processors have confirmed that these new fraud trends are being reported across the country. Efforts by EFT processors, as well as Visa and MasterCard, to determine the common point of purchase (CPP) have so far been unsuccessful. The “CPP” is defined as a mutual point where cardholders have made a legitimate purchase and where the card information may have been captured.

As I know you are aware, card fraud is very dynamic and trends change frequently. In situations where card information has been captured, this information is often used by fraud rings. These fraud rings usually work independently of each other. This often presents a challenge in identifying patterns and predicting how and when these patterns might change.

While it is impossible to prevent all fraudulent transactions, bankers can protect their customers and the bank by implementing a comprehensive risk management program that includes advanced technology, such as Falcon Fraud Manager, which detects suspicious cardholder behavior patterns and stops fraud before losses mount.

Customer education is another key element. Visa, MasterCard, and most EFT processors provide literature that banks can share with customers that offer tips to reduce the risk of card fraud. For example, customers could inform their banks of upcoming international trips so that banks would know to approve transactions coming from foreign locations.

Some banks have begun offering to alert customers of suspicious charges or changes to their accounts via email or text-messages almost as soon as they occur. Helping customers spot fraud early is another key to preventing big losses.

Additionally, bankers should periodically review their bank’s security policy and risk management plan to ensure that the best practices are being properly executed. One unread CAM or MC alert could cost your bank money in additional fraud losses.

Meanwhile, since most of the data breaches appear to be occurring at the merchant level, CBAI will work with ICBA and the card associations to make sure the merchants are practicing safe procedures.

Let us know if you have any questions or would like to share a fraud-related story. We want to hear from you.



Mike Duke
Vice President Electronic Payments
Community BancService Corporation, Inc.
800/736-2224
miked@cbai.com
  800.736.2224 (IL) | 217.529.2265  
  DISCLAIMER: The association is not responsible for and has no control over the subject matter, content, information, or graphics when viewing links attached to this association's site.