Logix Federal Credit Union was first founded as Lockheed Aircraft Employees Federal Credit Union in 1937. During the Great Depression, 12 charter members founded the credit union, providing Lockheed employees access to credit at a time when traditional bank loans were scarce.
The financial institution changed its name to Logix Federal Credit Union in 2012 and continues to be a pillar of financial stability and community support. Today, Logix is committed to making a difference through charitable donations, volunteerism, and the Logix Community Stars Foundation, which supports local charities.
With a commitment to serving its members, Logix management has always prioritized the company’s financial well-being and security. Protecting members from deposit fraud is an integral part of this commitment.
Logix has assets totaling nearly $10 billion and a membership of over 250,000 individuals, which means fraud prevention is absolutely crucial.
Matt Overin, Manager of Fraud Risk Management at the credit union, has extensive experience in the industry, lends a distinct perspective on the challenges and solutions necessary for effective fraud mitigation.
This case study will delve into our discussion with Overin and detail how the financial institution’s utilization of multiple AFS products bolsters security for its members.
Proactively fighting deposit fraud is a challenge for all financial institutions. In our discussion with Overin, several themes in deposit fraud were highlighted.
Increased online activity
The onset of the pandemic brought about a surge in online activities, causing society at large to rely more on digital services. The pandemic has reshaped people’s trust dynamics, making them more susceptible to online fraud and social engineering.
Variety of fraud targets
Fraud attempts at Logix were not limited to a specific age group. Individuals of various age groups, from younger members to seniors, were targeted. Fraudsters today target a wide range of account holders.
With the increasing sophistication of fraud attempts, our conversation highlighted the necessity of real-time alerts. To effectively combat fraud, Logix has to proactively identify suspicious activities as they happen.
Phishing and spoofing
Another alarming trend observed is the significant increase in phishing attempts and spoofing. Fraudsters consistently impersonate credit unions, with the intent to coerce individuals into disclosing sensitive information. Overin underscored the need for proactive measures.
To address the complex challenges posed by deposit fraud, Logix leverages Advanced Fraud Solutions (AFS). The combination of AFS’ products, including TrueChecks, and TrueACH, has enabled the credit union to combat fraudulent deposits and protect its members.
TrueChecks balances fraud prevention and efficiency
Logix has been utilizing TrueChecks for a decade, with outstanding results.
After a period of familiarization with the TrueChecks filtering capabilities, Logix was able to conduct periodic evaluations and data analysis to refine their check fraud detection process.
In determining a dollar amount threshold by analysis of deposits and fraud suspects, the credit union was able to streamline operations and achieved a balance between fraud prevention and efficiency.
Measurable loss prevention
During the pandemic, they recognized the need to increase the maximum mobile deposit amount from $5,000 to $10,000, as members couldn’t visit branches or ATMs due to safety concerns. To address this, staff members began dropping their mobile deposit files to TrueChecks every hour.
This proactive approach allowed them to swiftly identify the authenticity of checks, preventing measurable losses. The credit union’s strategic use of TrueChecks not only enabled them to prevent losses but also proved instrumental in maintaining uninterrupted operations during the pandemic and continuing today.
TrueACH leads to increase in non-member deposits
Initially, for ACH verifications, Logix was making manual phone calls to other banks, which was time-consuming and expensive. However, when the institution decided to increase the maximum ACH deposit amount for new memberships from $500 to $500,000, Overin knew that manual verifications were impossible without a dedicated team member for that task.
This led to the adoption of TrueACH, which automates the verification process and provides immediate responses to confirm the account status, account owner or authorized user(s). This action has enabled them to increase non-member deposits significantly while reducing their risk.
Stopping money mules
Logix also leverages TrueACH to protect its most vulnerable members, particularly in the context of elder abuse and fraud prevention, which is especially vital as many of their original members are aging. By utilizing TrueACH, they can effectively detect and prevent potential ACH scams safeguarding members from sending money to money mules.
Loan fraud prevention
Furthermore, the credit union has employed TrueACH in loan fraud prevention. When employees receive loan applications, they verify the name associated with the account holder’s bank statement in the tool to authenticate the account owner matches and ensure the account is in good standing. This additional layer of security helps them detect instances where bank statements are fabricated or do not belong to the applicant, thereby preventing loan fraud.
The impact of AFS products on Logix Federal Credit Union’s success is palpable. Without the adoption of these tools, the institution would have encountered several critical challenges.
The credit union’s use of TrueChecks enabled the financial institution to adapt to changing circumstances. During the pandemic, they recognized the need to increase the maximum allowable mobile deposit amount given the restrictions on branch and ATM access.
TrueChecks enabled them to not only facilitate this increase but also seamlessly process mobile deposits every hour. This proactive approach saved them from significant losses by identifying fraudulent checks swiftly, ensuring that members were protected from potential scams and enabled them to continue providing the level of customer service expected by its members.
In terms of ACH processing, the use of TrueACH helped Logix move from a manual review process to a more automated review process. TrueACH also helps maintain a convenient member experience, keeping ACH transaction holds to a minimum.
Defending Against Fraud, Avoiding Loss, Driving Efficiency
Through the implementation of TrueChecks and TrueACH, Logix has not only fortified its defenses against deposit fraud but also leveled up its operational resilience.
TrueChecks played a pivotal role during a crucial period, allowing the credit union to securely serve account holders remotely. Meanwhile, TrueACH revolutionized the credit union’s ACH verification processes, saving significant time and money.
Advanced Fraud Solutions helped Logix uphold a frictionless banking experience and a high level of member protection in an ever-evolving financial landscape.