WEST JORDAN, Utah–Since implementation of what it termed “aggressive” fraud mitigation strategies, $3.3-billion Mountain America Credit Union has reduced hard-dollar fraud losses while more at-risk dollars in fraudulently accessed accounts were protected.
MACU earned a Credit Union Journal Best Practice award through its use of tailored software, increased utilization of in-house solutions and special protocols.
From its highest loss total of 2007, Mountain America reduced comparative fraud losses 34% in 2011, 40% in 2010, 24% in 2009 and 16% in 2008.
According to Cathy Smoyer, SVP/chief risk officer, the goal of a good fraud-mitigation program is not to reach any “magic number” related to losses. Many factors must be taken into consideration, she noted, including member impact.
“Fraud is not a zero-sum game. A certain amount of fraud loss is expected and accounted for, but keeping the loss within established risk tolerances and balancing mitigation strategies with member impact is key,” she said.
MACU said these successes occurred while the credit union’s transaction base was growing significantly.
Striking a Balance
Balancing fraud-mitigation strategies while limiting member impact is “challenging,” Smoyer acknowledged, noting the ever-changing world of fraud requires MACU to continuously evaluate protocols and make on-the-fly adjustments to its mitigation strategies to reduce fraud losses and reinforce the confidence members have in its commitment to protecting their assets.
To achieve this balance, Mountain America has implemented a two-pronged strategy, which includes general parameters and “surgical implementation” of specific fraud scenarios.
The general parameters are significantly broad, so as to not catch legitimate member transactions in its net, whereas a surgical mitigation strategy tracks specific scenarios that identify known, past fraud trends and overlays these facts on current transactions. Thus, the number of legitimate member transactions blocked is greatly reduced, while fraudulent transactions are blocked on the first or second transaction.
The MACU fraud department has had “great success” building positive relationships with members and offering products when contacting them about suspicious account activity. On average, the department offers products/services to 200 members monthly. The most common product offered and accepted is account alerts, which has the added benefit of mitigating fraud losses. E-Statements and online banking are other products/services Smoyer said members are taking the opportunity to obtain during their interaction with the Fraud department.
Mountain America has received “numerous” positive comments from members about the prompt notification they have received about suspicious activity on their accounts.