It’s the most wonderful time of the year – for fraudsters

The holiday season means higher sales for retailers and seasonal opportunities for consumers to give charitably, but it can also mean increased fraud opportunities for criminals.

Fraud is a concern year-round, but it gets a new spin during the holidays. Phishing scams can take the form of emails from shipping companies luring consumers to click and enter information, unknowingly infecting their device with malware. Similarly, “Dear Santa” scams target children in an effort to steal personal identifying information to sell and share with third parties wreaking havoc.

Just as fraudsters share financial institution’s vulnerabilities within their network, communication can benefit credit unions and their members.

Check fraud remains one of the most common types of fraud because it’s easy to execute. Forgery, alterations, and counterfeit checks continue to prevail. This ‘old-school’ tactic is lucrative for fraudsters. A report earlier this year from the American Bankers Association noted that between 2014 and 2016, “check fraud losses saw their first increase since 2008, surging by 28% to $789 million”.

Other well-worn tricks that fraudsters deploy include work-from-home, lottery and contest scams. Victims are also socially engineered to cash fraudulent checks or wire funds to criminals posing as legitimate companies, while an “excess of purchases price” scheme is when criminals “mistakenly” send a consumer a check for more than expected and then ask consumers to wire back the extra cash.

In some instances, fraudsters may shop online and have goods shipped to them, only for the payee to realize that the method of payment, usually a check, hasn’t cleared.

High turnover at branch locations may also present vulnerabilities for financial institutions, as novice tellers fall prey to convincing counterfeit checks.

What CUs need to consider

While the threats are clear, FIs and consumers have multiple lines of defense.

In addition to getting an entire organization on board to fight fraud, credit unions can effectively foil fraudsters if they’re equipped with the right tools, policies, and procedures. This includes extra training for frontline staff before and throughout the holiday season. Staying in constant communication with members about their accounts and the latest fraud scams gives consumers agency to protect themselves. Consumer reports of fraud attempts can alert an organization to patterns and tactics of fraudsters, and give a financial institution an actionable advantage.

Consumers falling victim to holiday fraud means mounting losses for financial institutions.

Regular monitoring of accounts and use of a designated credit card rather than debit cards can help consumers avoid becoming victims. Using one credit card won’t link to a personal account and lessens chances of exposure to breach through multiple cards.

Just as fraudsters share financial institution’s vulnerabilities within their network, communication can benefit credit unions and their members. Taking steps to stay secure shifts the focus from fraud to festivities.

Written by Josh Sheehan is VP, Sales at Advanced Fraud Solutions in High Point, North Carolina,,

—originally published in Credit Union Journal