3 Keys to Establishing a Successful Fraud Department

What is fraud?

Is fraud the wrongful or criminal deception resulting in financial or personal gain? Or is fraud a person/thing intended to deceive others? Trick question, because fraud is both, and in today’s world, it’s become so much more. Your Fraud Department involves cards, checks, account takeovers, and even ATMs. Right now,  as you’re reading this, a fraudster is publishing an article helping to teach other fraudsters their own best practices. There is no telling how advanced fraud will become the future, so in this article, we’ll be covering three keys to consider across the ever-changing landscape of fraud departments – scratching just the surface of the experience of dedicated Risk Analyst.

key to fraud department success

The first key to consider…

In-house vs. full-service Fraud Departments

Every credit union is unique thus fraud departments come in all shapes and sizes. In-house and full-service credit unions may have different issues arise. For instance, an in-house credit union who is solely responsible for their own fraud may want to consider limited staffing.  A full-service credit union who is outsourcing its fraud department may have the complete opposite concern, in that there may be too many cooks in the kitchen. In-house credit unions may need to think long and hard about providing their own 24/7 call center, where a full-service credit union may need to continually calibrate the quality of their overnight calls, since they aren’t the ones picking up the phone. Something else to think about from an in-house vs. full-service perspective are fraud mitigation tools. An in-house credit union would need to use the tools they feel would fit to the strengths of those on staff, while a full-service credit union may count on the tools and expertise provided to them by their processor. The good news is there is no right or wrong answer, just different questions to consider.

key to fraud department success

The second key to consider…

Is your processor relationship a partnership?

Another aspect to consider when thinking about your credit union’s fraud management is your processor – processors have different levels and areas of expertise. How do you ensure your fraud mitigation rules are giving your credit union the ability to evolve with growing trends? Fraud mitigation rules can be very broad or very intricate, depending on the current trend taking place.

The big question to ask yourself is:  “Can my credit union just improve our partnership with our current processor to meet my credit union’s growing needs, or would a new processor provide better fraud strategies?”

The only way to find the answer to that question is to drill down and ask more specific questions, for example: “How are travel strategies going to change for my members? Will I be able to customize them to suit our credit union’s needs?”

Do a thorough analysis of your credit union’s wants and needs so you can begin to build your fraud strategies as well as have a clear understanding of your team’s expectations of your processor.

key to fraud department success

The third key to consider…

Fraudsters are getting smarter

With artificial intelligence and machine learning becoming more prevalent, especially in the fraud mitigation world, we can be sure that fraudsters will be investing in technology as well. It is imperative that your credit union have clear insight into the current performance of your Fraud Department – whether internal or external.

Looking to start a fraud department assessment?