Data breaches are still putting constant pressure on card issuers to mitigate fraud expenses, and that often involves placing restrictions on card use – a tactic that might save thousands in potential fraud losses but can irk members. How can credit unions fight fraud but keep members smiling? Here’s what a few credit union leaders did when members pushed back on card restrictions.
1. Make it worth their while. Not long ago, a retailer near the Freehold, N.J.-based First Financial Federal Credit Union was hit with a data breach. First Financial, which has $183 million in assets and 19,000 members, restricted card use at the retailer to get ahead of the fraud. President/CEO Issa Stephan remembered what happened next: “Someone called and said, ‘I was at Costco and couldn’t get my meds and stuff!’”
Stephan had already thought about that possibility, so with coffee mugs and a stack of gift cards ready, he invited the member to the office. “He came in here, I give him a mug and $25 gift card, and he was a happy member,” Stephan explained. He did this for others who raised concerns, often adding a personal note thanking them for being members.
Soon members were calling again – this time to thank the credit union.
“Really, I guess the big thing that they are surprised at is that the president of the credit union is aware of their situation,” Stephan said.
“It cost me $250 to make these people happy, but I protected the credit union from losing probably $20,000 to $30,000. You have to think about that ahead of time and be willing to do that,” he said.
2. Invest in explanations. It’s a critical, soothing part of the process, according to Sears Spokane Employees Federal Credit Union President/CEO Mark Smith. When Smith’s Spokane, Wash.-based cooperative, which has $5 million in assets and 680 members, put a $500 daily limit on some cards after a local retailer breach, it got about 10 or 15 calls from members right away. Offering a detailed, educated explanation about the reason for the restrictions proved key to turning the situation around for many, Smith said.
“The members really can understand the technical side of what and why that issue exists, and we explained that to them,” he said. “Then we let them know, this is what we’re going to do to resolve this, and this is what we’re looking at to resolve it.”
3. Offer a workaround. Mark Fox, vice president of payment services at the Spokane Valley, Wash.-based Numerica Credit Union, also encountered member complaints about blocked cards. Training the staff to get to the root of the member’s concern and then brainstorm alternatives makes all the difference, he said.
One member, for instance, was primarily concerned about two specific transactions clearing on a blocked account. The credit union decided to cover the checks and bear the risk.
“He actually really appreciated that,” Fox said.
Instant issue is also a popular solution, Fox said.
“If your card gets blocked, you can come in and certainly walk out the door with a card that’s going to work … you don’t have to wait a week for the card to show up in the mail,” he explained.
4. Take the lumps. If a breach, service disruption or other unsightly mess has landed on the doorstep, don’t hide it, Fox said.
“I can see there’d be a lot of benefit to putting a campaign on social media that says, ‘We experienced some sort of service disruption. If you experienced pain using your card this weekend, give us a call. We’re here to help. #mug #gift card,’ or something like that,” he said.
Then be ready to make good. “If lots of people take you up on it, that probably means lots of people were inconvenienced,” he explained. “That’s your cost to pay whether or not it’s comfortable or uncomfortable.”
5. Repeat. The world throws everyone for a loop sometimes – especially when data breaches and money are involved. That’s why simply being ready for feedback is an important piece of member service. Just ask the Liberty Lake, Wash.-based Spokane Teachers Credit Union, which has $2.5 billion in assets and 161,000 members.
“Reports of hackers stealing personal and financial data from major retail chains have become an almost weekly event,” Media and Communications Manager Dan Hansen said.
About 18 months ago, there was a tipping point.
“What we found was, there were so many of these [retailer] breaches that within a few months people stopped calling. It was such old news that I think a lot of people felt like, ‘Oh, it’s just inevitable; eventually my card’s going to be bumped.’”
Lately, it’s been pretty quiet, Hansen noted. But his team’s on standby.
“When the next big one comes up, we’ll probably get more calls,” he said.
