You May be a Member’s Last Line of Defense against a COVID-19 Scam

April 24, 2020

By Jovilyn Herrick, Director, Compliance Consulting Services

For every shining light of humanity COVID-19 has revealed, there’s the equally glaring dark side of opportunistic crooks. Scammers delight in upheaval, and likely began strategizing their callous crimes long before the pandemic was classified as such.

Credit union staff are in a unique position. Often standing between a thief and his or her mark, they are the frontline soldiers in a fast-evolving, often digital, war on fraudsters. Awareness of COVID-19 crimes du jour is one of the most effective weapons in a credit union’s arsenal.

Although there are many different ways cyber and IRL scoundrels will attempt to get their fists around your members’ money in the coming weeks and months, two threats in particular seem to be popping up in the CU space: financial elder abuse and charitable donation scams.

Financial Elder Abuse

As recently reported by the NCUA, older adult victims lose $2.9 billion to financial exploitation annually. COVID-19, and all the dominoes falling in response to it, is likely to up this number in a big way.

Financial elder abuse often takes the form of friendly fraud. Using the challenges of quarantining and social distance as an excuse, people with legitimate connections to an older member may try to play on a credit union’s compassion to take illegal liberties with the older member’s finances. One resource you may consider working into your training is the NCUA’s Reporting Elder Financial Abuse or Exploitation video, which explains to credit union managers and staff how to spot, prevent and report cases of financial abuse. Others included the CFPB’s advisory on preventing and responding to elder financial exploitation and the NCUA’s interagency guidance on the topic.

Your credit union may want to provide a quick refresher on internal procedures, such as validating identification / signature cards and reviewing account notes / history. You may also turn some of the training attention outward and contact seniors within your membership to provide them proactive education on current scams targeting their age group. Take advantage of May’s Older Americans Month to tie your awareness initiatives to the larger efforts society is undertaking to protect the most senior among us.

If you experience a financial elder abuse scam, report it to the appropriate authorities in your state.

Charitable Donation Scams

Preying on the empathetic spirits of credit union people, scammers may attempt to use your cooperative in a variety of ways. First, they may solicit donations to a phony nonprofit that appears to align perfectly with your mission. Second, they may try to sock away their ill-gotten donations within a share account at your credit union. Third, they may target your members, asking them to send money to help people when, in fact, they intend to keep it for themselves.

Here again, training, rigorous following of procedures and communication will be key. Remind credit union staff of account opening requirements and keep them updated on the latest scams targeting financial institutions and the people who bank with them. Run a test to see how closely staff members are adhering to the policies – new or long-held – that your credit union has put into place.

If you find staff are especially keen to mobilize community support during the pandemic, consider reading up on how credit unions can – and have – helped out during natural disasters. NAFCU put together a thorough resource on ways credit unions can open donation accounts, make donations and provide services to impacted credit unions and their members.

Lastly, over communicate with members about the legitimate charities you support, or if you have one, your credit union’s Charitable Donation Account (CDA) portfolio. Doing so may direct their well-meaning donations to a cause you hold near and dear, rather than the fraudulent foundations of would-be swindlers.

Services performed by ViClarity are compliance and not legal in nature, and do not form an attorney-client relationship or any of the protections attendant to the attorney-client relationship.