Bankers and the badge: Longtime collaboration fights fraud

On the third Thursday of the month, in a non-descript conference room on the second floor of Traverse City's Hannah & Lay building, local bankers are fighting crime. They've been at it for more than two decades and are the anonymous catalyst behind as many as 100 arrests throughout the region, according to Traverse City detective, Derek Sutherin.

"This group is able to share information of a suspicious nature without compromising anyone's privacy. It would be safe to say that their biggest accomplishment is catching financial crimes that otherwise might have gone undetected for a longer period of time and involved more victims."

The official title of the group is the Traverse Area Security Officers Association – a polite-sounding name for a group organized against such rudely illegal activity as cash advance fraud, rental refund theft, bad check writing groups, data breach, lottery and inheritance larceny, identity theft, ATM card scams, and more. The crooks behind these swindles are getting more accomplished at their trade, everyday.

"If you look at a counterfeit check from five years ago and compare it to one from today, there's no question these people are getting much more sophisticated," said Len Classens, CEO of East Traverse Catholic Federal Credit Union and current chair of the Association. "This group is proactive. We keep current with what's going on."

The Association was founded in the mid-1980s by sheriff's deputy Jim Harvey, now retired, who was concerned by the number of false alarms coming into law enforcement dispatch from local banks, and putting a drain on resources. "I asked myself, 'Why can't we just get all these bank people together?'"

Harvey made some phone calls and the group was born. Today, every bank in the region and some from as far away as Grand Rapids sends a representative to attend meetings and trainings, but that couldn't happen until some very dicey privacy regulations were discussed and a strict protocol of confidentiality was agreed to. The group wanted to compare notes, but not names, and so all tips shared between Association members are general in nature and do not contain any identifying information about customers. No names, no account numbers, no business names, just a description of the suspicious activity, range of dollar amounts, and supporting paperwork if there is any.

For example, an official-looking fax was recently received by Northwestern Bank requesting the release of financial information of one of the bank's depositors. The fax appeared to be from the U.S. Department of Transportation and also appeared to be signed by the depositor, authorizing Northwestern to release such sensitive information as the operating account number. A teller at the bank notified Cindy Neddo, the bank's vice-president for security and fraud prevention. Neddo checked the signature, and even though it was an exact match, she was immediately suspicious of the fax partly because it originated from a foreign fax number. Neddo called the named depositor to alert him to the activity and learned that her suspicions were correct and that he had not signed any such authorization.

After blacking out the names, account numbers, and telephone numbers on the fax, Neddo shared it with members of the Association. Some tips are shared at the monthly meetings and particularly time-sensitive information is shared via a phone tree and email chain.

"If I can help stop this kind of thing before it even starts, that's exactly what this group aims to do," said Neddo. "Next month someone here will be passing on a tip to me."

Northwestern Bank recently unveiled its new ATM/debit card fraud program, which uses expensive computer software and trained staff to help prevent account fraud. As of January 12, if an ATM transaction or debit card purchase appears suspicious based on a customer's previous usage, Northwestern will call the customer to verify usage. The way to respond to fraud, Neddo said, is with a combination of computers, well-informed customers, and groups like the Association. BN

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