Implications of Plastic Card Fraud Pressing on Credit Union System
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| Mary Martha Fortney |
CUNA Mutual reports that the credit union industry lost $100 million last year from plastic card fraud. The 2006 losses are expected to be more significant than last year.
NASCUS met with members of CUNA Mutual’s plastic card protection group recently to discuss issues related to plastic card fraud. CUNA Mutual will no longer be able to cover the significant losses of its credit union policyholders. As such, CUNA Mutual is implementing new underwriting guidelines and requirements for plastic card security in order to reduce plastic card fraud losses.
The implications of the growing plastic card fraud issue could pose serious risks to the credit union system. Right now, much of the plastic card services offered by credit unions is insured risk. But if credit unions don’t address the issue and adopt best practices to protect their institutions, they might be faced with an elevated amount of uninsured risk – a potential safety and soundness concern that will certainly catch the attention of state regulators.
NASCUS has a long standing relationship with CUNA Mutual, one of our Dual Chartering Benefactor members. We intend to work with CUNA Mutual to help regulators and credit unions understand the consequences of plastic card fraud.
CUNA Mutual reached out to NASCUS to increase state regulators’ awareness of the growing plastic card fraud problem. NASCUS is providing opportunities for CUNA Mutual to discuss the issue with NASCUS regulator and credit union members at upcoming events.
Marc Krasnick, CUNA Mutual’s senior vice president of credit union protection products, will present at the State System Summit, August 10-12 in Dana Point, California. Krasnick will address the serious challenges posed by plastic card fraud and outline steps credit unions can take to prevent losses. Krasnick was a contributor in the latest Regulatory Crier on this issue. His article can be accessed here (Member log-in required.) CUNA Mutual will also lead discussion on credit card fraud at the upcoming NASCUS Annual Examiner’s School, July 10-14 in Madison, Wisconsin.
While plastic card fraud is certainly not new, it has reemerged as a critical topic in the credit union system. CUNA Mutual stresses that plastic card losses can be prevented if credit unions institute best practices. CUNA Mutual is asking credit unions among other things to ensure that:
For more fraud protection best practices or additional information, visit CUNA Mutual’s Web site at www.cunamutual.com As the issue continues to develop, NASCUS will provide updates on its web site at www.nascus.org.
To view the Special Message from the President and CEO Archive, click here.