Community Bankers Association of Illinois

CBAI Fraud Alert Update

Late last month and again last week, CBAI emailed a Fraud Alert to all member banks concerning the nationwide increase in debit card fraud and provided advice on how to protect the bank and its customers.

Meanwhile, CBAI has contacted security professionals at the bank card associations, EFT processors, ICBA Bancard, and the U.S. Secret Service. Many of these professionals said the incidence of debit fraud is FAR GREATER than at any other time in history. They expressed a collective opinion that a significant data breach has likely occurred and the volume of stolen account numbers will probably dwarf the TJ Max breach!

Furthermore, EFT processing representatives revealed that nearly half of their community bank clients are not subscribing to a neural network or any fraud risk management tools! CBAI strongly recommends that community banks implement all of the anti-fraud tools provided by their EFT processor.

Several Illinois community bank CEOs have recently reported losing tens of thousands of dollars due to debit fraud. They said their losses would have been greater if they had not subscribed to risk management systems such as neural networks.

In one instance, criminals rang up more than $10,000 in fraudulent purchases before an overdraft alerted the customer to a problem, and now the bank is out $10,000 because no anti-fraud system was in place. The concern now is that other customers may also be victims and the bank will not know for certain until those customers overdraft their accounts and call the bank.

Many bankers are understandably frustrated and angry as a result of being victimized by criminals who have conspired to steal from their banks, and law enforcement’s seeming ambivalence toward investigating, apprehending, and prosecuting the criminals. Law enforcement tends to operate in secrecy until they have sufficient evidence to convict.

Recommended Steps

VISA recently disclosed that it is conducting 95 separate fraud investigations. The U.S. Secret Service is also investigating card fraud. CBAI encourages community bankers to report payments fraud directly to the U.S. Secret Service. Please email the account number, dollar amount, date, and merchant information to Amy Byrum, Special Agent, at, or you can call her at 972-868-3221. Do not send accountholder personal information. Community bankers can also counteract debit fraud by utilizing all of the risk management tools offered by their EFT processor. Generally, these services cost less than $2,000 per year, a bargain compared to the losses that have been reported. Remember, an ounce of prevention is worth a pound of cure.

Bankers should also educate and inform customers on how to avoid becoming victims of card fraud. Attached is a letter that a CBAI member banker recently sent to all customers. As he wrote in the last sentence, “Preventing a crime or reducing a loss is a cooperative effort……”

CBAI will continue to monitor trends and report findings and recommendations to member banks, encourage law enforcement to aggressively pursue criminals, and press regulators and lawmakers to enact laws that protect banks.


Michael W. Kelley
Community BancService Corporation

P.S. CBAI will soon post fraud-related information on the Fraud Section of the CBAI web site. Please check that site often for current information.

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