August 07, 2020

NCUA Risk Alert warns CUs of pandemic related fraud

NCUAThe NCUA Thursday issued a Risk Alert to inform credit unions about the fraud risks associated with the coronavirus pandemic and outlined red flags associated with common fraud schemes that have arisen since the enactment of the CARES Act.

“Those committing fraud often attempt to take advantage of opportunities made possible through new or expanded large government programs arising from emergency situations, such as the CARES Act,” wrote NCUA Chairman Rodney Hood in the alert.

The Risk Alert flagged several types of fraud and the corresponding risks involved, including:

  • financial institution fraud;
  • Small Business Administration loan fraud;
  • business tax credits fraud; and
  • unemployment fraud.

In addition, the Risk Alert outlined the proper protocol for credit unions to report fraud, as well as encouraged credit unions to educate members with fraud prevention and financial literacy resources and to remain aware of the rapidly changing nature of these schemes.

Read the full Risk Alert.

Relatedly, the Financial Crimes Enforcement Network (FinCEN) issued an advisory last month on the potential indicators of two types of consumer fraud – imposter scams and money mule schemes – that have been observed amid the coronavirus pandemic. The advisory, containing descriptions of these scams and schemes, also includes financial red flag indicators and information on how to report suspicious activity.

NAFCU is a leader in calling for a national data security standard and was the first group after the massive 2013 Target data breach to call for a legislative solution to reform the nation's data security system.