RANCHO CUCAMONGA, Calif.-With fraud tactics changing rapidly, more CUs are understanding the importance of employing neural networks to detect threats as they occur. But one expert questions whether some CUs are overlooking the human component of this fraud solution.

Connie Trudgeon, VP of operations for CO-OP Financial Services, questions whether all the credit unions investing in neural networks are making appropriate investments in personnel to monitor and manage the systems.

"With neural networks you have to have resident experts," said Trudgeon. "Many financial institutions still don't commit the resources so they have good coverage (for their neural network) within their credit union. The neural network itself can only take you so far. You have to have people looking at trends, defining strategies and building rules that apply to the neural network. It also requires close partnership with your payments processor to let them know what you are seeing at the credit union regarding transactions."

Part of detecting and stopping fraud as it happens requires that the CU post and update contact information on their websites so members know whom they can contact immediately when they suspect fraud, noted Trudgeon. The CU should also have a rich database of member contact information so it can reach its members quickly when threats are detected.

 

Knowing Members' Limits

Another practice that Trudgeon suggested more CUs consider is reviewing members' daily limits on transaction dollars based on individual behaviors. "Has the credit union recently looked at spending limits against spending patterns? Look, on average, at what a cardholder spends. So if the card has a $10,000 daily limit, for example, and the cardholder at the most spends $500 a day, there is huge gap between that $500 and $10,000. That is a lot of unnecessary risk."

Trudgeon said daily spending limits in place today were often set years ago, when fraud threats were not as great, and issuers allowed members to spend up to their line limit on a daily basis. Trudgeon also cautioned the credit union to be on the lookout for thieves testing for small amounts before sending through a serious attack. "We are seeing more and more testing of small transactions by criminals just to see if they can get authorization. And if they do, then boom, they hit."

 

 

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For info: www.co-opfs.org.

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