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2011 year of system intrusion says CUNA Mutual fraud expert
MADISON, Wis. (5/18/11)--Last week’s debit breach at retailer Michael Stores Inc., where at least 90 payment terminals in 20 states were tampered with, came as no surprise to Ann Davidson, senior consultant in risk management for CUNA Mutual Group, and others in the card security business. Davidson called 2011 “the year of the system intrusion,” with card associations such as Visa and MasterCard reporting two or three breaches every day. The uptick in fraud is one of the downsides of the today’s wired world, Davidson said. “As everything is moving to electronic, criminals are getting more sophisticated too,” Davidson told News Nows. “They’re relentless. They continue to search until they find the weakest link. At the end of the day, they want to find the easiest way to put cash in their pockets.” And there are many “links” in the card processing chain that provide potential points for entry for fraudsters. In addition to the credit union’s card system, criminals can tap into merchant encryption, third-party processors and point-of sale software. With such sophisticated attacks, Davidson said it is critical that a credit union has in place a fraud management system that automates the process of fraud detection, raising alerts based on pre-defined rules and proactively analyzing transaction data. Davidson likened a fraud management system to a home smoke detector. “If something’s smoking, the alert goes off,” she said. But just as important, she adds, someone has to be home to extinguish the flames. “It’s great to have it in place, but somebody has to be in place to react 24 hours a day, seven days a week, 365 days a year,” she said. Once fraudulent activity is detected, Davidson advised credit unions to contact their service provider, processors and card associations. “Communication is key,” she said. As proof she pointed to the detection of the Heartland Payment Systems breach in 2009. “Credit unions were critical to uncovering that breach,” Davidson said. “They got on the horn with their card associations. They sent out communications to everyone involved that they were noticing an increase in card fraud.” Communication is vital because if multiple financial institutions or merchants are involved, processors and associations are equipped to put the pieces to together to detect a global breach. “It’s a team effort,” Davidson said. “There’s no silver bullet in the world of card exposures.”


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