Dr. Fraud Diagnoses an Issue with Text Alert Services

Amy Donaghue

By: Marcy Cauthon, AAP, APRP, NCP, Director, On-Demand Education

Season 2 of Payment Systems Update will be kicking off next month, and our new star, “Dr. Fraud”, has a question for you – does your financial institution utilize a text alert service to notify account holders of a:

  • Transaction that has exceeded a certain dollar limit?
  • Suspicious debit/credit card transaction?
  • Credit card payment that is due?
  • Balance that has dropped below a certain dollar amount?
  • Transfer done for overdraft protection?

Well, guess what?! Fraudsters have learned how to access your account holder’s online banking information via sending a fake text message. That’s right, and they can even make the text look like it came from your financial institution, so your account holders believe it is legitimate. Once fraudsters gain access, they can change account information, such as contact phone numbers, addresses and more. Essentially, this means fraudsters debit the unsuspecting account holder’s account and send a credit to their own account elsewhere. Or, they may even utilize the account holder’s online access to pay their bills via a Bill Pay service your institution may offer. We have seen a LOT of person-to-person (P2P) transfers occurring.

But, it doesn’t stop there! According to Dr. Fraud, understanding how this type of fraud occurs is just the beginning. Ask yourself, would Regulation E apply in this situation? It could if the fraudster has initiated an electronic funds transfer that the account holder didn’t authorize. What advice could you give your account holders in the event this situation happens? Contact your financial institution immediately. What if your account holder initiated a P2P payment but later discovers it was a scam? If the transaction was authorized, Regulation E doesn’t apply.

Dr. Fraud will address these types of questions and more in Season 2 of Payment Systems Update! Join us to hear from Dr. Fraud about the various types of fraud going on in payments today. The good doctor will also be throwing out various questions to the studio audience to see how you think certain situations should be handled. So, if you have not done so already, subscribe today to be a part of the live studio audience! Remember, if you already registered for the series, you’ve already picked your date for Season 2. Be sure it’s marked on your calendar! Recordings of all three seasons are also included with your subscription in case you can’t make the live events.