Foreclosure, Card Risks Rethink Ways to Stop Fraud

Michelle Samaad
March 2, 2009 | COMMENTS

Foreclosed property sales jumped from 500 in 2006 to 2,600 in 2008 said CUNA Mutual Group's Commercial Insurance Division Senior Vice President Jack Goodwin.

The astronomical increase recently led CUNA Mutual to partner with Lee & Mason Financial Services Inc. to offer a commercial foreclosure property and liability insurance policy for credit unions' member business loans. Credit unions will be able to better manage risks associated with owning an increasing number of foreclosed commercial properties, the company said.

“Fraud has no geographical boundaries,” said Goodwin at NCUA's Risk Mitigation Summit last week. “Complacency can be dangerous and expensive.”

Goodwin said between 2004 and 2008, 36% of bond losses were a result of employee dishonesty followed by 19% from fraudulent deposits and 13% that occurred on premises. When credit unions provide a new service to all members or expand into a new area that they are unfamiliar with, it unfortunately sometimes opens the door for fraudulent activity, he said. Another problem is the use of outdated technology.

In 2008, there were 645 card breaches and 46 million accounts compromised, he added. The Heartland Payment Systems card rupture may reignite efforts for credit unions and others to consider newer forms of access such as mobile phone transactions, Goodwin noted. CUNA Mutual has advised credit unions to read the company's alerts on Heartland, work with their card processors, reissue or monitor compromised cards and provide member education.

This article was originally published in Credit Union Times at www.cutimes.com and is reprinted with permission.