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A survey of 283 financial institutions – including credit unions – revealed that payments fraud losses remain a big issue for the majority (75 percent) of respondents. This survey, conducted by the Federal Reserve Bank of Minneapolis, also worked to identify ways to reduce this kind of fraud.

The survey found that financial institutions' losses on debit and credit cards were typical, with 96 percent of debit card issuers and 77 percent of credit card issuers reporting them in 2016. Furthermore, now more than 80 percent of financial institutions are issuing chip cards to consumers in an attempt to combat fraud for in-person point-of-sale transactions.

Of the credit union respondents to the survey, 64 percent were less than $50 million in assets, 22 percent ranged from $50 to $200 million in assets, 13 percent were $200 million to $1 billion in assets and 2 percent were more than $1 billion in assets.

Of note from the survey, a greater portion of smaller financial institutions (those with less than $50 million in assets), reported no payment fraud attempts (38 percent) and no fraud losses (45 percent). Comparatively, more than 80 percent of financial institutions in all other asset-size segments reported that they experienced payment fraud attempts and losses.

As far as fraud prevention, the survey found that a centralized approach, where it is managing by one area within the financial institution, is used by 58 percent of respondents; 12 percent use a decentralized approach; and 30 percent have a mixed approach. For those financial institutions with more than $1 billion in assets, 33 percent manage fraud through a centralized approach, 17 percent through a decentralized approach and 50 percent with a mixed approach.

When analyzing ways to reduce fraud, the survey found that customer diligence – reviewing transaction activity and statements and reporting any suspicious activity to their financial institutions – was effective for all payments types: cards, checks, and automated clearinghouse and wire transfers.

At 3 p.m. Eastern Feb. 15, the Federal Reserve Bank of Minneapolis will hold a free webinar reviewing these results. To register, please send an email to mpls.psog.events@mpls.frb.org by Feb. 8.

This survey was conducted during July and August last year and had about a 5.8 percent response rate from financial institutions.