Fighting Online Card Fraud: Keeping Member Data Safe in Cyberspace

November 29, 2015 Co-op Solutions

couple seated at cafe using mobile phone and laptop

couple seated at cafe using mobile phone and laptopBy any measure, e-commerce is a fast growing industry. In fact, reports that the U.S. e-commerce sector is growing at more than 14% annually, handily eclipsing economic growth in this country. And while Americans are increasingly shopping online, fraud related to these transactions is also on the rise.

Consider a recent Javelin Strategy & Research study published by which predicts that online fraud in the U.S. will reach $19 billion by 2018. This estimate is almost double the $10 billion figure the firm reported for 2014.

“Many experts in the industry are speculating that the nationwide migration to EMV credit and debit cards is accelerating this alarming trend in online fraud,” said Amy MacMullen, senior product manager for CO-OP Financial Services. “The theory is that because fraudsters can no longer easily create counterfeit cards, they will shift their focus instead to card-not-present transactions. Whether or not this is the case, the fact remains that consumers are increasingly purchasing online, a dynamic that presents security challenges for credit unions and their members.”

There’s No Substitute for a Great Watchdog

In the fight against online card fraud, MacMullen emphasizes the important role trained analysts play. “It is imperative that a credit union has access to experts in fraud detection,” she said. “Choosing a service provider with deep resources in this area can dramatically improve outcomes.”

MacMullen notes that when supported by the most advanced technologies, trained analysts can immediately respond to the first signs of fraud and mitigate the situation, often before the credit union and its members are even aware of it.

Data analytics can help analysts quickly zero in on the source of a compromise, and fraud detection systems such as Falcon Fraud Manager can provide them with a real-time score to help determine how risky a transaction is,” she said. “Other tools are available that can categorically block transactions that meet a specific criteria, such as those originating from countries or regions known to be hotbeds of fraud. When overseen by experienced analysts, these tools can make a tremendous difference in safeguarding member card data.”

Placing Security in the Hands of Members

While support from fraud detection experts and systems is critical, there are several measures credit union members can take themselves to reduce their risk online.

“New e-commerce technologies such as Visa Checkout and MasterCard MasterPass are very effective at protecting card-not-present transactions,” said MacMullen. “This is because once an account has been set up, billing and card information resides only at these networks. The user never has to type in account information again to complete transactions, so fraudsters have absolutely no access to that data.”

She also advises members with mobile devices to use complex passwords for all you accounts and to setup fingerprint authentication on your device if available. However, even with these added layers of protection, MacMullen notes that consumers should always take precautions.

“Make sure your members know not to provide personal information to any unsolicited requests or to social media sites,” she said. “And when they are ready to place an order, advise them to type in the website URL instead of clicking on e-mailed links or allowing the browser to direct them.”

According to MacMullen, it is also important to ensure that a merchant’s URL starts with “https” instead of “http” as the “s” indicates a secure site. A lock icon at the bottom of the browser provides further assurance that the site is secure.

“The rest comes down to common sense,” she said. “Members should be reminded to shop only with online merchants they trust, to vary their passwords and to change passwords frequently. And just as they don’t open their doors to strangers, they shouldn’t open messages from unknown senders.”

MacMullen continued, “Have your members check their account activity routinely, and introduce them to new apps for card controls and alerts that can be set to approve online transactions only when the member themselves are making the transaction, or alert them in real time when a transaction occurs. As a credit union, you are in a great position to educate members about security and help them safely enjoy all the speed and convenience of online shopping.”

The original article Fighting Online Card Fraud: Keeping Member Data Safe in Cyberspace can be found on Insight Vault.

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