Fortifying Fraud Operations for Strategic Resilience

Guest editorial by Canh Tran, co-founder and CEO of Rippleshot


Fraudsters pose a serious and harmful threat to consumers, with the Federal Trade Commission receiving more than 2.8 million reports of fraud from consumers in 2021 alone – demonstrating the need for credit unions to strengthen their fraud prevention strategy to better protect their members.

Canh Tran

Motivated by lucrative returns, the unfortunate truth is that fraudsters in today’s environment are extremely successful. Much of their success is based on their level of creativity, sophistication and the use of the latest technology advancements to perpetrate their crimes. Credit unions that simply rely on payment networks for compromise alerts often risk costly delays and cardholder friction and in truth, will forever be playing a game of catch-up. Only by taking a page out of the book of the fraudsters themselves, and by focusing on building a more proactive, strategically resilient fraud department, will credit unions be in a position to move as fast as the fraudsters.


Digitize, Optimize and Automate


So what does it mean to have a “strategically resilient” credit union? It begins with an organizational mindset that is guiding strategic decisions based on relevant data and the intelligent analysis of that data. As an example, a Kentucky-based credit union with more than $1 billion in assets has successfully developed its own data warehouse to house and support the analysis of large amounts of historical data. The results of their efforts is a reduction of credit card fraud by 75%.


However, having the data is not enough – it only represents the beginning of the path to strategic resiliency. It must become “actionable data.” Digitized in the form of an intuitive dashboard, information should be clearly laid out and optimized to help fraud teams understand how to best leverage the data available.

While a credit union’s own card transactional data is a good place to start when assessing fraud strategy, it is limiting in regard to trends impacting FIs across the country. Imagine combining in-house data with a consortium of thousands of other FIs, providing a clearer picture of the current state of fraud. With a system to manage and leverage this type and amount of transactional data sourced from a larger pool of contributing institutions, credit unions can target fraud more effectively. They will also be positioned to identify data breaches, high-risk merchants and compromised cards, plus access real-time industry data like dark web activity, such as stolen BINs or account information being sold.


By leveraging the power of modern AI and machine learning tools, fraud teams can focus their efforts on strategizing based on the massive amount of data that has already been reviewed on their behalf, rather than getting lost in the manual review of a limited amount of data. Furthermore, separating findings based upon key insights, including cyber data, common-points-of-purchase, and the latest fraudulent merchants -- paired with a list of recommendations for quick and confident implementation -- further strengthens credit unions’ anti-fraud operations.


While a commitment to strategic resiliency positions credit unions to be more proactive in their approach to detecting and preventing fraud, it also enhances the credit union’s use of member and transaction data to drive marketing initiatives and strengthen membership. The detail provided in the data allows credit unions to develop a deeper understanding of their members, as well as enhance the ability to market better to specific demographics. In the case of the Kentucky-based credit union mentioned earlier, their data revealed a need for specialty cards within the community and an opportunity to increase membership through that program.


Fraudsters are relentless in their attacks, and that is never going to change. With this in mind, credit unions need to be relentless in their proactive preparation for future attacks, rather than reacting after fraud occurs. Utilizing the right tools and processes, credit unions can take the optimal next steps to fortify their fraud prevention strategy and ultimately become strategically resilient organizations.


Canh Tran is co-founder and CEO of Chicago-based Rippleshot, a provider of proactive fraud detection and prevention solutions to financial institutions and their customers. For more information, visit www.rippleshot.com.

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