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#1413553 - 07/09/10 06:49 PM Debit Card Fraud Loss
Hockey Rules Offline
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Our Operations Department has become concerned with the increase in debit card fraud loss. The customer fills out a form and signs claiming they did not authorize this transaction. A few ideas have been to; encourage them to open a seperate account and debit card if they plan to do transactions online and never keep monies in it except when they are making a transaction, recommend using a credit card for online purchases, etc. Does anyone have any other ideas? I think like all other fraud, we have only seen the begining.
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#1413582 - 07/09/10 07:39 PM Re: Debit Card Fraud Loss Hockey Rules
BrendaC Offline
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There are many other types of transactions that can result in significant losses - particularly, travel & entertainment type expenses where authorization floors can be very different. Also, it is not reasonable because so many types of transactions are online these days - pay your taxes, buy your car tags, etc. You can't expect your clients to segregate their money to protect the bank from losses - that is just not a reasonable solution. You might as well go ahead and tell them to move their account down the street, because that is what I suspect they would do. I certainly would.

Just curious - do you reduce available balance at the time a transaction is authorized?
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#1413612 - 07/09/10 08:26 PM Re: Debit Card Fraud Loss BrendaC
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Brenda, I completely agree that customers will be not excited about the options and why I through the question out. After looking at our numbers, the loss is minimal in my opinion. Yes, we reduce the balance when it is authorized, thus their reasoning behind opening another account. smile Any other pro or cons would be much appreciated for me to go back to them with.
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#1413623 - 07/09/10 08:36 PM Re: Debit Card Fraud Loss Hockey Rules
BetsyS Offline
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Have you contacted your Debit Card processor and asked them for suggestions on reducing your fraud losses? Our processor offers several solutions, and will complete a review of a client's program and recommend changes to reduce fraud. Of course you have to weigh the cost of of adding additional fraud services to the fraud losses before signing up.

You might also look to see if there are any fraud or card forums your institution can join. We belong to couple, and strategies are always a topic of discussion.
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#1413629 - 07/09/10 08:40 PM Re: Debit Card Fraud Loss Hockey Rules
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I don't see any pros. Your liability for potential losses would not decrease simply because the card is linked to a different account.

I can see the reasoning of "if they don't have a lot of money in that account, the transaction will get declined and we don't take a loss". That may be true, but if the card number is compromised, the crooks will still find a way to use it. They look for patterns, they try cards on usual paydays when they expect there to be more money, etc.

PROS: none that I can see

CONS:
* customer service issue
* MORE potential fee income losses, as customers would likely forget which card to use for which account and they end up overdrawing one by accident, etc. Due to Reg E changes, unless they opt in, you won't be able to charge them an OD fee.
* You're now expecting your customers to balance TWO checking accounts. We all know that people have problems balancing one. wink
* How are you going to enforce it?! You can't expect to call Mr. Customer and say "We noticed that an amazon.com charge posted to your account #123. All your online purchases should only be made to account #456." Really?
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#1413747 - 07/10/10 10:12 AM Re: Debit Card Fraud Loss Aggs
Andy_Z Offline
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From a new account generation perspective it is a good idea. But IMHO it stops there. Customers don't want another account, another fee, or to have to transfer funds to make a purchase.

Some cards I have seen allow a user to quickly get a new, temporary number issued that would be used on a one time basis. If you can get a system like that, and get customers to use it, it is win-win.
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#1413923 - 07/12/10 04:48 PM Re: Debit Card Fraud Loss Andy_Z
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If a customer willingly gives her pin number to a friend and lets the friend use her debit card several times. When the friend uses the card without permission, is it fraud? The transactions were mostly ATM withdrawals which, of course, are pin based. However, there were two or three transactions that were sig based.

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#1413990 - 07/12/10 06:43 PM Re: Debit Card Fraud Loss Rebecca1
BrendaC Offline
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No. That is NOT an unauthorized transfer.

Many of the losses I see could be avoided by: utilizing vendor solutions to identify possible fraud during the authorization process and training staff on what is and what is not unauthorized. Also, staff should be trained on how to ask the questions relative to potential losses.

I have actually heard employees counseling customers on how to report losses to make sure they are paid. "When did you lose your card, because if it was earlier than Monday and you tell us that, you will have to eat some of the loss on this charge." REALLY? Come on now, customer service is one thing, but let's stick with just documenting the facts! LOL.
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#1413994 - 07/12/10 06:54 PM Re: Debit Card Fraud Loss BrendaC
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Thanks everyone, that is a great help. Brenda, I agree the training needs to be spot on. Aggs, you are completely on the same page with me. Betsy could you pm me some forum names, it might help me in the search. smile
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