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Michigan Credit Union League Home » CU Community » SAS Credit Unions » Marketing » Newsletter Help » Fraud and Scams  

Additional Newsletter Topics
Lori Z. Bahnmueller
Michigan Credit Union League-YOUR MONEY MATTERS

PLYMOUTH, Mich., May, 1999 — It’s a scam artist’s dream come true.

“I got a call from a man who said he represented my financial institution. He said they’re having trouble preparing for the Year 2000 and that I need to transfer my money to a special account until the bank can comply with the Year 2000 requirements. I hung up when he asked me for personal information.”

“I got a call from a woman who said she needed my credit card number to verify that the card would work after January 1, 2000. Is this a scam?”

Reported by the Federal Trade Commission (FTC), the above accounts illustrate the latest twist in “identity theft.” Defined by the FTC, identity theft occurs when someone uses the identifying information of another person to commit fraud or engage in other unlawful activities.

This personal information can be used, for example, to either take over or open a credit card account under someone else’s name, take out loans in another person’s name, and write fraudulent checks or transfer money from another person’s bank, credit union or brokerage account — all of which can have dire financial consequences for the identity theft victim.

Identity theft isn’t new, but thanks to the hype and hysteria surrounding the Year 2000 change, scam artists are pursuing a fresh angle.

“The confusion about the Year 2000 computer issue is providing more opportunity for scam artists to take advantage of consumers,” said Darlys Lawinger of CUMIS Insurance Society, the property and casualty bond underwriter for more than 11,000 credit unions in the country. Lawinger also oversees a fraud awareness program that arms front-line personnel with the latest fraudulent schemes directed against credit unions and their members.

Some con artists have tried to persuade people to take their money out of banks and credit unions to avoid computer foul-ups, then turn it over to be invested with them in gold, silver, small-company stocks or other assets.

Other unscrupulous fraudsters claim to be financial institution examiners or regulators. In this scenario, the caller insists that the financial institution is not Y2K-ready, and instructs the person to transfer funds to a bond account specially designed to safeguard funds into the new millennium. The scammer asks for personal information and/or the account number and verbal authorization to transfer the money.

The Year 2000 computer issue is likely to provide greater opportunity for fraud as the millennial date change draws nearer, Lawinger said.

“I expect to see more of these Y2K-related incidents as we get closer to January 1, 2000,” Lawinger said. “Fraudsters typically strike when the iron is hot — when fear is at its peak.”

Knowledge is power.
Because of the essential role they play in depositors’ lives and the economy, credit unions and banks are closely regulated for safety and soundness — and the Year 2000 issue is no exception.

Whether a Michigan credit union member or bank customer, your funds are federally insured up to $100,000. In the case of credit unions, member deposits are insured by the National Credit Union Share Insurance Fund. Bank customer deposits are insured by the Federal Deposit Insurance Corporation.

Even if you have more than $100,000 on deposit your funds still could be fully protected. That’s because, under the insurance rules, money held in different types of ownership accounts (joint accounts, retirement accounts, etc.) is separately insured up to $100,000.

That’s why the safest place for your deposits — in the new millennium and every day of the calendar year — is with your credit union or bank, where your funds are federally insured.

Protect yourself.
The FTC suggests consumers employ the following to avoid becoming a victim of identity fraud:
* Never give out personal information — including your credit union or bank account or credit card numbers — over the phone or online unless you’re familiar with the business and have initiated the contact. Scam artists have a way with words. Don’t fall for lines from strangers telling you how to “verify” their identity. Scam artists can use your personal information to commit fraud against you.
* Be on the alert for unauthorized charges to our credit card. If you haven’t authorized a charge, don’t pay it — dispute it. Follow you credit card issuer’s procedures for disputing a charge.
* If you notice unauthorized debits to your checking or savings account, contact your financial institution immediately.
* Check the FTC Web site,, for interesting reading and further information on avoiding scams.

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