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NCUA warns of sophisticated fraud schemes
WASHINGTON (1/30/08)—The National Credit Union Administration (NCUA) is sounding the alarm about a new scam in which fraudulent wire transfers have been performed on home equity lines of credit (HELOC) at several financial institutions, including credit unions. The alert, issued Monday, advises credit unions to be diligent in protecting access to member accounts and to ensure credit union staff receive adequate training to recognize fraudulent activity. In instances of the HELOC scam, the NCUA said, an imposter typically obtained publicly available HELOC information from filings with state and local government entities and, combined with social engineering tactics, obtained access to member accounts. The imposter then initiated a draw on the member’s HELOC account, and subsequently initiated a wire transfer from the account. The regulator’s alert noted that some of the scams involved a high level of sophistication, which enabled the fraudster to bypass certain authentication controls. For instance, in some cases the imposter had the ability to fool Caller ID software by making it appear that the call initiated from the account holder’s valid phone number. In others, the imposter was knowledgeable of recent account activity--such as deposit or withdrawal amounts--and used such information to authenticate himself/herself as the account holder to the credit union representative. In the warning signed by David M. Marquis, NCUA’s director of examination and insurance, credit union management was advised that there may be variants to the scam described in the alert, such as similar fraudulent activities being launched for accounts other then HELOCs. The NCUA said it will continue to follow the issue and provide additional information as warranted. It also reminded that, where appropriate, management must file a Suspicious Activity Report in accordance with established regulation.
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