Republished from CU Times dated May 3, 2021. By James McCabe.
When many credit unions were figuring out how to protect their institutions and survive during the COVID-19 pandemic of 2020, several credit unions decided to take decisive action to support the members outside of the CU walls. With the pandemic creating a perfect storm of vulnerability for many members, especially the older members, it was apparent that everyone was facing an avalanche of attacks.
Some credit unions have boldly stepped up their commitment to help members in this unique and unprecedented time by providing their members with services that protect against the tidal wave of ID theft & fraud happening around them. Members saw these highly effective and protective services as an added value from their credit union as they became included with their checking accounts for just a nominal monthly fee. Typically, these new protective services' retail value was worth at least (10) ten times more than the account level fee, which resulted in member acceptance rates of over 90% ….thus generating non-interest income as well.
With more ID fraud and theft happening outside of credit and finances, these services were just what members needed to stay protected against all forms of cyber assaults from hackers and other ID thieves. Dark web monitoring and fully managed ID theft recovery services included in these strategic services to members also assured the members of an ultimate safety net against any form of ID theft or fraud…financial or non-financial. The amount of COVID-19 related scams, schemes, and fraud happening in 2020 was beyond anyone's imagination. So these special actions by credit unions were well received by members as powerful means to defend their identities.
Unfortunately, 2021 is not forecasted to be any better. The Experian Data Breach Forecast predicts that this will be the year of the 'Cyber-demic.' It is hard to believe that 2021 could surpass the horrific ID fraud loss seen in 2020. Leading up to the start of the pandemic, the annual recorded consumer ID fraud loss was $13 billion. By the end of 2020, the figure had more than tripled to a record of $43 billion. And according to the 2021 Javelin Strategy & Research Report, the total combined consumer and business fraud loss in the country was $56 billion, demonstrating how consumers (your members) faced a double dose of physical and financial harm during the pandemic.
Credit unions that implemented protective ID programs in 2020 also positioned their members for a defense against the 2021 continuation of the same potential attacks and more. Your members are already facing a massive amount of unemployment benefits fraud. There was $63 billion lost to fraudulent unemployment claims in 2020, and if things don’t change, 2021 is trending towards a nationwide loss of $300 billion. In addition, the ID Theft Resource Center already calculates that the 1st quarter of 2021 saw a 564% increase over the 4th quarter 2020 for breached records….and that does not include the announcement in early April 2021 of 500 million LinkedIn users who were breached.
In mid-March 2021 the FBI issued a statement on the sharp rise in Phishing scams, and the statistics show that consumers (members) still need to be made aware of these attacks. Each time a credit union implements a protective ID program, they also provide thorough education and awareness updates. This action is critical to ensure that members fully understand the dangers they face from some very sophisticated criminals and to fully appreciate the protection they now receive from their credit union.
With the recent report by Canalys showing that more data records were breached in the past 12 months than in all the previous 15 years combined, it is clear that the cyber-demic is in full force. And, unfortunately, it will continue according to all major predictors. So, at what point does it make sense to implement the kind of protective services your members need in these times of heightened risks? Clearly, members are willing to accept and appreciate these services when presented with a robust value proposition by their credit union. And clearly, these are the kind of services that set credit unions apart from other financial institutions…..going the extra mile for their members.
Jim McCabe, Senior Vice President, Identity Theft Services at Vero.