PALM DESERT, Calif.–Three people who oversee credit cards at their credit unions shared their stories of how they dealt with “fallback fraud,” lack of usage and an unexpected dip in interchange, respectively.
Here’s a look at what each had to say during PSCU’s Member Forum here:
Hammered by “Fallback Fraud”
Dana Blanton, Card Services Manager at Arlington Community FCU, Virginia
In late 2016, ACFCU’s EMV portfolio began getting hammered by a lot of fraud, and the big question initially was how non-chip fraud was hitting the chip cards. What the credit union discovered, said Blanton, was it was all due to “fallback fraud,” which can happen during the transaction when the chip doesn’t read and the transaction reverts to a swipe.
In this case, the fraudsters had taken steps to ensure the chip didn’t function.
“The thing with the fallback is we found out is we don’t have charge-back rights,” said Blanton.
To resolve the issue, she turned to PSCU’s DataVue solution, went to the POS entry mode field and ran a report on how many of those transactions were going through, and it turned out to be “quite a few.”
“We were able to narrow it down to not just how many were happening, but we were able to see by merchants,” said Blanton. “We started blocking five or six merchants for EMV fallback transactions. We haven’t experienced any negative feedback. But it still felt like we were plugging holes. So, we contacted Falcon and asked what can we do, and we provided examples and asked about what kind of rule could be put in place. We were able to put in place a few steps that have really decreased our fraud. For the most part, it has really helped. Doesn’t stop all fraud, but has put limits in place.”
Card Upgrades & E-Statement Adoption
Delynn Byars, SVP-marketing, First South Financial CU, Memphis
In reviewing its portfolio on three cards—a rewards card, a rebate card and a regular Visa Platinum card—Byars said First South Financial discovered it had a lot of cards on the standard Visa Platinum portfolio, even though it also offered what members often say they want in plastic.
“We realized our staff was very, very comfortable selling our regular card, and did not understand our rebate and rewards cards,” she said.
In response, Byars said she imported PSCU’s CommunityVue report into its DataVue solution to identify cards not active, and then customized the report to the last purchase date. “What I was really looking for was regular Visa card holders whose cards were activated, but not being used for some reason,” said Byars. “We designed an email and sent it out every 60 days that says, ‘We bet you didn’t know we have rebate and rewards cards. If you want to switch, this is easy.”
The credit union offered 10,000 points on its rewards card and $250 on its rebate card to entice members to switch. Since December 2016, it has had 67 members convert cards, and another $60,000 in requested balance transfers.
On the e-statement side, the credit union has been offering $5 to members to make the switch. “We found that after the second mailing on e-statements the credit union had saved the $5.” It has had 426 credit card accounts make the switch.
Dipping Interchange
Dan Arita, product manager, credit card and rewards programs, BECU, Seattle
Using PSCU’s MemberInsight solution to dive a little deeper into its numbers, “what we uncovered was pretty interesting using CommunityVue,” said Arita. “One report was the top 50 merchants report, and that shows all transactions at account level on volumes and dollar purchases. We found some pretty big variances among merchants, and we were able to narrow down by merchant category code. We had three large merchants… and were able to see the dollar impact from what we expected to receive versus what we did receive. The numbers were pretty large. That was step one.”
Step two, said Arita, was a custom report in MemberInsights that broke out the numbers by month where it was able to pinpoint which month across each of those merchants where the dip occurred.
“What all this helped me calculate was where the missing interchange income came from and how it was impacting our bottom line,” said Arita. “What we discovered was certain merchants negotiated their own reduced interchange rates.”
Arita noted BECU, like all CUs, pays a percentage of the purchase price on its rewards card. What it discovered was that its three largest merchants were leaving the credit union in a negative position on what it was collecting on rewards and what it was paying in interchange. As a result, BECU had to make some pricing decisions and other changes.