Three Keys to Establishing a Successful Fraud Department

What is Fraud?

Is fraud the wrongful or criminal deception resulting in financial or personal gain? Or is fraud a person/thing intended to deceive others?

It’s a trick question because, as it turns out, fraud is both. And in today’s world it’s become so much more. Your Fraud Department deals with cards, checks, account takeovers, and ATMs. Right now, as you’re reading this, a fraudster is publishing an article instructing other fraudsters about their own best practices. There is no telling how advanced fraud will become the future, so in this article we’ll cover three keys to consider across the ever-changing landscape of fraud departments just scratching the surface of the experience of dedicated Risk Analyst, Kody Tuupo.

The First Key to Consider…

In-House vs. Full-Service Fraud Departments

Every credit union is unique and fraud departments come in all shapes and sizes. In-house and full-service credit unions may have different issues arise. For instance, an in-house credit union that is solely responsible for monitoring their own fraud may want to consider limited staffing. A full-service credit union who is outsourcing its fraud department may have the complete opposite concern: there may be too many cooks in the kitchen. In-house credit unions need to think long and hard about providing their own 24/7 call center. Whereas a full-service credit union needs to continually calibrate the quality of their overnight calls, since they aren’t the ones picking up the phone. Something else to think about are fraud mitigation tools. An in-house credit union would need to use the tools they feel would fit the strengths of those on staff, while a full-service credit union may count on the tools and expertise provided to them by their processor. The good news is there is no right or wrong answer, just different questions to consider.

The Second Key to Consider…

Is Your Processor Relationship a Partnership?

When thinking about your credit union’s fraud management, consider your processor – processors have different levels and areas of expertise. How do you ensure your fraud mitigation rules are giving your credit union the ability to evolve with growing trends? Fraud mitigation rules can be very broad or very intricate depending on the current trends.

The big question to ask yourself is: “Can my credit union simply improve our current processor relationship to meet our growing needs, or would a new processor provide better fraud strategies?”

The only way to find the answer to that question is to drill down and ask more specific questions, for example: “How are travel strategies going to change for my members? Will I be able to customize them to suit our credit union’s needs?”

Do a thorough analysis of your credit union’s wants and needs so you can begin to build your fraud strategies as well as have a clear understanding of your team’s expectations of your processor.

The Third Key to Consider…

Fraudsters Are Getting Smarter

With artificial intelligence and machine learning becoming more prevalent, especially in the fraud mitigation world, we can be sure that fraudsters will be investing in technology as well. It is imperative that your credit union have clear insight into the current performance of your Fraud Department – whether internal or external.

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