For more information: 
Phil Tschudy 608/231-7188  philip.tschudy@cunamutual.com
Rick Uhlmann 608/231-8940  rick.uhlmann@cunamutual.com

Jan. 15, 2008

ID Thieves Stealing Large Amounts from CU HELOC Accounts
CUNA Mutual Alerts Policyholders to Scams and Offers Prevention Recommendations

MADISON, WI – CUNA Mutual Group is warning credit unions of a sophisticated scheme that has recently resulted in a large number of high-dollar funds transfer losses involving home equity line of credit loans.

Perpetrators are targeting members who have been granted large lines of credit via HELOC loans, said Gary Pate, director of insurance compliance and risk management.  The perpetrator sends a fax or email requesting the credit union process a funds/wire transfer. Usually, the transfer requests are received at credit unions with call centers.

The wire requests are for large amounts frequently in excess of $100,000, and are being sent to different banks in the United States, China and Japan. Often, the wires are being sent to accounts with the words "Title" or "Construction" in the account name, Pate said.

Fraud has successfully occurred in credit unions that have strong security procedures. In some cases, the staff has followed their credit union's written procedures to include call-backs to a secure telephone number.  However, fraudsters have apparently made arrangements, presumably with telephone providers, to have calls forwarded to their phones, thus confounding credit union call-back procedures.
 
“What’s making these scams even more insidious is that the credit union's caller ID indicates the call is going to the member's number of record. Additionally, the fraudsters have detailed member information, which is enabling them to answer additional challenge questions from credit union staff,” Pate said.
 
Currently, 18 credit unions have reported losses or fraud attempts totaling in excess of $6.5 million with more losses expected, he said.  CUNA Mutual is assisting the FBI and Secret Service with their investigation.

In addition, CUNA Mutual sent its Bond policyholder credit unions a risk alert Jan. 3, titled, “HELOC Draws Result in Large Funds Transfer Losses.”   The alert advises them of their responsibilities and offers the following loss prevention recommendations: 

• Establish a password system for members prior to accepting funds transfer requests by telephone, fax or mail.  Further, the credit union should have a written agreement with the member for the use of these passwords.  Credit unions are allowed to pass liability to the member for any negligent use of their funds transfer password.
• If there is any doubt as to authenticity of the funds transfer request, credit unions are reminded they do not have to perform a wire transfer.
• Beware of large dollar requests for wire transfers that draw against a HELOC, particularly HELOCs that have large available balances and little previous activity.
• Limit the amount of wire transfer that can be completed by a call center employee. The wire transfer request should be approved by a manager.
• Record conversations during the call-back and compare it to previously recorded conversations.
• Listen to the caller.  Does he or she have an accent that is inconsistent to your membership.
• Perform an additional verification to the member's work and/or cellular telephone number.
• Additionally, if the credit union has the information, send an email to the member at home and/or work.

Credit union policyholders who have experienced a loss are encouraged to contact CUNA Mutual’s Credit Union Protection Response Center at 1-800-637-2676.

CUNA Mutual Group is the leading provider of financial products and services to credit unions and their members worldwide. More information on the company is available on the company’s Web site at www.cunamutual.com.