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Fraud ... times four!

Don't even know where to start, there is so much fraud out there. Guess we should begin where the wheels are squeakiest and that would be debit card fraud. It ramped up starting last Friday and our friends in southeast Oklahoma were particularly hard hit over this past weekend. Our bankers are collecting breach information on the spreadsheet (click here) provided by the Secret Service and I can assure you Agent Matt Ralls is diligently working on this. The question remains, what is OBA doing to help you on this front? Quick answer is "a lot" but we do need your continued help.

  • OBA is helping to host working meetings of an ad hoc debit card group where we share common points of purchase, test points and locations of usage. Financial institutions, processors and law enforcement are sharing techniques that can help to detect and, hopefully deter, future losses. The next meeting will be 9:30 a.m., on Aug. 27, at IBC. We anticipate a large number of attendees since we will have a VISA representative present, so ask that you only send the person(s) most directly responsible for your debit card systems. Please RSVP for this event through the Groupsite or send an e-mail to Sharon Williams at BancFirst, SMLewis@BancFirst.com, or Elaine at elaine@oba.com to help us better plan.
  • We have a dedicated, encrypted Groupsite for our bankers to ask questions and discuss what they are seeing in real time. If you have not signed up for this site, send an e-mail to elaine@oba.com and you will receive an invitation. We are vetting sign-ups so it is limited to financial institutions, law enforcement and processors in Oklahoma.
  • We are recommending a second, nationwide message board that is run by Fair Isaac, www.fraudalertnetwork.com. That is a larger resource to alert you to trends across the U.S regarding debit card fraud. It is restricted to banks and law enforcement also.
  • OBA has reached out to the ABA to ask they help assess the level that this breach is impacting banks nationwide and doing what we can do to better protect our bankers from these tremendous losses. They have been very responsive and we look forward to their strong support.

Now, what can you do to help? Track your losses on the spreadsheet linked to this alert and get those to OBA or directly to Matt Ralls, Secret Service, matt.ralls@usss.dhs.gov. Use the Groupsite and FICO site to ask questions and get current information. Send a representative to the August meeting. If you cannot attend, call Elaine for an update after the meeting and look for notes on the Groupsite. We have some incredibly talented IT folks in our banks who have been great to help others on how to limit losses. It's the networking that keeps Oklahoma bankers safer!

Second issue and original reason for this Fraud Alert: attorneys, realtors and businesses are still receiving the huge cashier's and corporate checks. Attorneys are still being asked to deposit it in a trust account, and later wire it out of the country. The most recent instance was a $300,000 Canadian corporate check on a food distributor. If it is sent for collection through the Fed, you may receive provisional credit long before you learn that the check is not good. Remember, any international check is not subject to Reg E and there is no midnight deadline for return.

Remind everyone in your bank that simply checking dates, check numbers and amounts is not enough on a cashier's check as you need to verify the payee also. On corporate checks, you can skip the step of calling the bank for verification, as the check will be written on a real account that will have substantial funds. Their bank may or may not be aware of the counterfeit checks and may just verify routinely. Instead, get a phone number for the company (not the number written on the check or accompanying documentation) and call their bookkeeping department for direct verification. We can always get assistance from the Canadian Mounties (PhoneBusters) on cases with Canadian connections, but it can be resolved quickly and easily upfront by calling the purported maker of the check directly. Best points for training, just remember that international checks are under different rules and call the company directly on corporate checks.

Third, we are seeing a resurgence of the aggressive phone campaigns that result in unauthorized paper drafts (and now ACH withdrawals) from your customers. It presents almost exactly like the Canadian telemarketing group that has twice been investigated since 2004 and paid minimal penalties. In the past, they called senior citizens, named their bank and asked for accounts numbers. In this most recent version, they appear to already have account numbers. They then use this information to tell seniors that they have to purchase identity theft protection since they have their numbers and their account has been breached.

Rest assured the breaches have not occurred at the bank level and our best guess is that these customers have written a small check to a group that they believed to be a charity and that is how the data could have been collected. Some customers agree to the service just to get these pushy folks off the line and others, who have not made any sort of authorization, still see withdrawals. Remember you have 60 days now to return as unauthorized. Since many of your customers may not be scrutinizing their accounts in detail, you can watch for paper draft withdrawals for Atomic Processing with a memo stating ID Protect. They range from around $277 to $399. If it proceeds as it has in the past, the name of the companies will change over time and we are already seeing that trend.

We have already seen these all over our state and one of the larger banks has seen just under 20 in the past few weeks. Calling the 877 number for the company, you will hear that they are just an umbrella representing about 30 different companies and have no information or responsibility for the charges. Their Web site indicates they offer plans for legal representation for families, medical discounts and pet assurance plans. Their home office is shown to be in Florida. While these are not large number losses, they can occur multiple times a month and can have a dramatic negative impact on seniors on fixed incomes. We ask that you monitor for this occurrence, check with your customers to see if they actually wanted to authorize payment and, if not, return promptly as unauthorized. Our RCMP friends are helping on this and our local FBI bank fraud team is being asked to help us in alerting the banks across the country that are depositing the funds. We will also pursue this with the Florida Attorney General's Office.

Fourth, and finally, reports of social engineering are rising daily. Most recently (lunch last week) I learned that employees at a very secure bank are now receiving e-mails purporting to be from customers, requesting account balances. A bank in a northeastern U.S. state posted on Fraud-Net that they had a fraudster change a customer's phone number, then use that new number to verify distribution of a large amount of money through a wire transfer. Increased training and awareness can safe us all from this type of fraud.

When we hear of anything that can be helpful to our banks, we do our best to get it out to you, so thanks for taking the time to read our alerts. Be vigilant every day and stay safe out there!

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