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Posted on Wed. Apr. 23, 2014 - 12:01 am EDT

With fraud on rise, Midwest America credit union restricts debit card use


In an effort to limit losses from debit-card fraud, Midwest America Federal Credit Union has restricted use of its debit cards.

Mike Woehnker, vice president of marketing for the credit union, chose not to be too specific about the restrictions. But a note posted on the credit union's website provides a clue: “If you are experiencing problems with transactions in the states of New York or California, please contact us immediately…”

Recently staff at the credit union began seeing problems with transactions in those two states, and now the same patterns of fraudulent card use have started cropping up in other states, he said. Automatic transactions – such as monthly withdrawals for cable service, for example – have shown up as leading types of transactions targeted by criminals, he said, but they've shown up in many kinds of transactions, Woehnker said.

It's not a problem unique to this credit union, Woehnker noted. Many credit unions and community banks in this region are tightening restrictions, he said. After the notorious theft of numbers from Target last year, many financial institutions restricted use of their cards there.

The solutions the credit union tries vary with a customer's circumstances. Sometimes Midwest America asks customers to make their purchases with a personal-identification number to add another layer of security. Other times it will simply issue a new card with a new personal identification number, erasing the effectiveness of stolen card numbers.

Another alternative: using PayPal for online purchases, Woehnker said.

“Whoever's behind these (frauds), they are really masterminds,” he said. When financial institutions up their security, criminals seem to probe the new measures and find fresh workarounds to evade them.

“It's really becoming like a chess game,” Woehnker said.

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