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Safeguarding Against Fraud in a COVID-19 Era

Originally published at Tina's Take Blog.

As of May 7, U.S. consumers have lost $27.24 million to COVID-19 fraud, according to the Federal Trade Commission. Of those, credit card losses accounted for $5.02 million, coming in just behind wire transfers at $7.18 million.

Despite numerous warnings from the FBI, IRS and others, fraudsters are capitalizing on the pandemic to take advantage of consumers, highlighting the importance of community banks in supporting their customers in their battle against this opportunistic fraud.

Internal Actions

  • As I reported in my previous column, ICBA Bancard has noticed a rise in card-not-present transactions during the pandemic. While this may revert as states begin to open-up, community banks can leverage some of the lessons learned from card-not-present scenarios to help safeguard other transactions by:
  • Initiating more standardized alerts and controls –Encourage customers to utilize fraud prevention tools like card alerts and controls. You may want to consider lowering thresholds for alerts or positioning the program as a value-add to encourage automatic enrollment.
  • Examine transaction limits – Review limits on accounts for purchases, daily spend, card not present, cash advances, and remote deposit capture to determine if they should be modified.
  • Conduct portfolio reviews –Are there inactive cards that should be closed? Customers whose limits should be adjusted? Interest rate adjustments you should consider? These are just a few things to consider as you conduct portfolio reviews to reduce your risk exposure.
  • Reach out to customers –Provide regular customer updates and offer helpful safety practices) to avoid phishing or spoofing attacks. There are several free, ready-made assets to help you communicate best practices to your customers. Walk them through the process of setting alerts and controls and emphasize offerings like multi-factor authentication and tokenization that provide additional safety measures for transactions.

Planning Ahead

While no one knows for certain what the post-COVID-19 environment will be, we can strategize about how it may impact our business—and what that means for shifts in fraud threats.

It’s also important to recognize that consumer behaviors are becoming more digital because of safe-at-home orders, which may mean your clients’ preferences may be changing as well. These are important factors that should be taken into consideration in reviewing customer usage data to help project future behaviors and align them with necessary updates to fraud rules and processes.

If your modeling reveals an increased preference for a digital experience, how does that impact your branch network? Think about service options in and out of the branch and consider what tools and skills you will need—from additional fraud education and differing in-branch security measures to shifts in daily operations.

COVID-19 has thrown new fraud opportunities into the mix, and we know from experience that fraudsters will gravitate to the path of least resistance. As the stewards of our customers’ resources and their trusted advisors, we must remain one step ahead, helping to protect them—regardless of the pandemic.

Tina Giorgio is ICBA Bancard president and CEO.