In December of 2019, a North Carolina man logged into his credit union and watched as a scammer withdrew money from his account. In early April, a fraudster impersonated credit union employees, asking customers to tell him their account information — he then withdrew more than $10,000 of their savings.
Last year, hackers cost U.S. consumers a combined $16.9 billion in identity fraud, according to Javelin Strategy & Research. As the COVID-19 pandemic spreads across the United States, the risk of account takeovers is up. According to Julie Esser, chief experience officer at CULedger, a credit union services organization (CUSO), credit unions going digital has led to a rise in criminals targeting remote call centers.
“Predators prey on these entry-level positions to try and get personal information out of them,” Esser said. “They just pretend they are somebody they’re not and oftentimes it’s successful.”
CULedger started as a research project in 2016, with 70 credit unions and industry trade groups dropping a combined $650,000 into a pilot blockchain project aimed at preventing call center fraud. The group chose to focus on blockchain because it was a proven technology, Esser said: “I’m not aware of any blockchain that’s been hacked.” Two years later, the Denver-based company was officially formed and is now putting its technology to the test.
Today, more than 500 consumers use CULedger’s signature blockchain technology. Eleven credit unions across the U.S. have signed on to work with the firm. And the participating industry groups have dropped another $10 million to scale CULedger’s business.
“In order for credit unions to survive, they need to work together. They have the same requirements as the mega banks do from a regulatory standpoint, but fewer resources to do it and pay for it,” Esser said. “They’re left with no choice. They’ve always been reliant on third-party relationships to help them provide services for their…