Identity thieves are having a field day with scams, particularly lucrative ones aimed at home equity lines of credit (HELOC). Others have stepped up their card scams, and phishing and vishing efforts to take advantage of consumers' good will and inattention to details during a busy holiday season.
The HELOC scams are increasing, according to Brad Mundine, regional manager for CUMIS' credit union protection and risk management division. He wrote an advisory last month that said HELOC account losses from theft have "increased significantly" this year, with the insurer losing more than $4 million so far in 2010 (StarTribune.com Dec. 23).
As a result of some HELOC thefts, lawsuits have cropped up, pitting consumers against their lenders, and lenders against their insurance companies over who pays when someone makes unauthorized charges. Credit unions are involved in at least two lawsuits related to thefts from HELOCs.
Last week a lawsuit was filed by a member against a Burnsville, Minn.-based Affinity Plus FCU after he was told he would have to pay nearly $90,000 in unauthorized charges against the his $200,000 HELOC account. The member, Mike Calcutt, found out about the theft during a conversation about interest payments on the loan in March. The thefts occurred after someone set up telephonic banking privileges on his account, then executed nine transfers of $10,000 each from his credit line to his savings account, and then instructed the credit union to wire the money to a drop account in Boston. Once there, the money disappeared.
In a separate case, Citizens Financial Bank in Indiana refused to cover $26,500 in bogus charges on a couple's HELOC after money was wired to a bank in Austria, where the money disappeared. A third case, filed in Philadelphia, involves another credit union, SB1 FCU, which covered a member's $220,000 loss from a HELOC and sought to recover the loss from its insurers, who denied the claims.
The Credit Union Information Security Professionals Association told the Star Tribune that of the 131 banks and credit unions participating in a 2008 webcast, 29 reported HELOC wire fraud incidents.
HELOCS aren't the only scams circulating. During the holidays a number of credit card scams surfaced. Here's a roundup of the latest scams:
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