BOKF Specialists Fight Fraud

In a large office space divided into numerous cubicles in the Bank of Oklahoma Technology Center at 41st Street and Sheridan Road, a group of specialists work to stay a step ahead of the perpetrators of fraud.
Through their efforts and the technology they employ, the Deposit Risk Management Group of BOK Financial Services is able to keep Bank of Oklahoma Financial Corp’s fraud losses to about $100,000 a month on a potential fraud exposure of $4.5 million a month, said W. Keith Parsons, senior vice president and Deposit Risk Management manager.
He said his department works more than 200 fraud cases per month over the seven charters of BOKF.
“Every day I come in to work I am amazed at what I see, the amount of fraud,” he said. “Unless you see it in a consolidated manner, you have no idea how much fraud goes on.”
Statistics show:
? Total consumer fraud losses in 2007 totaled $1.2 billion, and the average monetary loss per victim was $349 (Consumer Fraud and Identity Theft Complaint Data Report, FTC, 2008).
? The average loss per identity fraud case is $6,383 (The Council of Better Business Bureaus and Javelin Strategy and Research, 2006), yet consumers shoulder only 7 percent of these financial losses. It is businesses, and most often financial institutions, that take the hit.
? The Internet is becoming a major tool that identity thieves use to find victims and commit fraudulent activities. Scammers continue to exploit Web sites that promote online auctions and want ads, job hunting, dating (sweetheart scams) and social networking to find victims (Identity Theft Resource Center report- 2007 Year in Review).
? Scams to gather personal information continue to flourish: Lotteries, jury duty, IRS audits, Nigerian, account verification or phishing, money laundering and check cashing (Identity Theft Resource Center report- 2007 Year in Review).
? 85 percent of businesses have experienced a data security breach, but only 42 percent had an incident response plan in place (The Business Impact of Data Breach, Ponemon Institute, 2007).
Parsons, who worked for the National Security Administration as an intelligence analyst in Military Intelligence until it ended and also worked Counter Narcotics as a senior intelligence analyst before moving into bank risk management in the mid-90s, said criminals are constantly using technology, organization and communication to probe for weaknesses in financial networks.
For example, he said, breaches of merchant services and the theft of data contained on the mag stripes of credit and debit cards have provided criminal rings with “massive amounts of information.”
“These organized rings are so bad right now, they have so much data they can’t use it all, so they are sorting them by expiration dates and hitting cards right before they expire,” he said.
But because they know the technology and understand that banks are capable of catching fraudulent use with the first purchaser on a card, they coordinate so the same card is being used in five different countries, including the U.S., at the same time.
“They will maximize it to get the purchase power out and exceed the customer’s spending limit all within an hour, before the bank systems catch it and close those cards,” Parsons said. “That is how organized and in communication they are.”
BOKF’s centralized fraud department has several different reports, technology and monitoring systems that identify suspicious activity, he said.
“They are rule driven, parameter driven, so we can adjust. For example, if I see a lot of fraud activity in Italy or Spain, I can run all the reports. They give me all the card purchases in Italy or Spain for this region or this bank, and that way we can look at them quickly, but it also reports any unusual activity, analyzes behaviors and norms for a customer, and then identifies suspects,” he said. “That is what we do all day.”
Parsons, who has been with BOK Financial Services since 2000, said Internet scams are notorious this time of year.
“People fall for secret shopper and work-from-home scams that are all part of Internet Nigerian scams, and they send them counterfeit deposits,” he said. “All a person has to do is go into a bank and buy a $5 cashiers check and they have everything they need to counterfeit it – they have how it looks, the style, signers – scan it and they have an official check.”
Although cashiers checks are one of the most counterfeited items, most systems have control mechanisms that reject the checks, Parsons said.
“As long as you aren’t the organization that cashed it and it is on you, it’s going to reject from pause pay and pay name verification systems,” he said.
Still, when people receive a cashiers check, “their training and belief is, well, this is good, this is an official check,” Parson said, citing a large business customer who fell for a scam from South Korea.
“They got the check, ran it through the remote capture deposit, wired the money to South Korea and the next day they were out $300,000,” he said.
Parsons said one of the shifts in fraud activity identified in the past year involved BOKF’s TransFund network of ATMs.
“Criminals know by law you have to give the client $100 immediately (on ATM deposits), so they were making 74 empty envelopes, 50 empty envelopes, just to get that first $100 dollars and going in and maxing out their ATM card because it gave them immediate credit,” he said.
In response, the network was updated to limit the number of ATM deposits allowed in a day based on “what normal customers do,” he said.
Parsons said a ring in Texas found a weakness in the ATM reporting system. When they probed the systems, they discovered if they made a deposit before 5:30 p.m., the bank put it on a hold, and if they made it after 6 p.m., they didn’t get credit until the next morning and the bank put a hold on it that morning.
“We had one 30-minute window, and that was just for staffing purposes, and they figured it out,” he said. “As soon as they figured it out, they were putting in empty envelopes, maxing cash, and then running to Oklahoma to the casinos and maxing out their debit cards. So we had to shift our report.”
Because speed is everything in limiting the loss in fraud scams, Parsons said his department is eager to incorporate faster technology systems.
“We are still primarily day two,” he said. “We are pushing for next year to move into technology systems that are into day one.”
“I do have a day one on ATM. We actually know what the suspicious deposits are prior to the customer receiving the credit and we are able to close the account, freeze it or put holds on it before they have access to cash,” he said.
IBC Bank – Oklahoma is remodeling office space at Main and Fifth streets with plans to move its branch at 111 W. Fifth St. into the new location Feb. 2, 2009.
The branch and staff are relocating to the new office, 11 E. Fifth St., because “the new location is more central and more visible,” Terri-Lisa Anthony, marketing coordinator for IBC Bank-Oklahoma, said.
The bank is moving from 3,500 SF to 2,750 SF.
“The new location is smaller but with more efficient use of space, it will improve the banking experience for our customers,” Antony said.
International Bank of Commerce (IBC Bank) — Oklahoma is a member of International Bancshares Corp., an $11.5 billion multi-bank financial holding company headquartered in Laredo, Texas, with 263 facilities and 420 ATMs serving 101 communities in Oklahoma and Texas.
Scottrade is relocating its Tulsa branch from 8221 E. 61st St. in Eton Square to 8205 E. Legal Court, Ste. 105 on Dec. 22.
Scottrade is an online investment firm that provides the tools and research for customers to make their own investment decisions. Scottrade does not provide investment advice, but stock brokers are available at branch offices to answer account-related questions, provide customer service and give tutorials on Scottrade’s online trading services.
Miya Littlejohn, operations and financial officer at American State Bank, recently completed the Oklahoma Bankers Association Operations School. Littlejohn was among two dozen bankers who graduated from the Operations School at Oklahoma State University in Stillwater.
The OBA Operations School, held annually, prepares junior-level operations managers to manage effectively and efficiently an operations function within a bank.
Jay Betz, chief financial officer of Great White Energy Services, has been elected president of the Tulsa Chapter of Financial Executives International.
Mark Smith, vice president – treasury operations of Oneok, was elected vice-president of the chapter. Robert Hyink, assistant controller of Spirit AeroSystems, Inc., and Stan White, controller of Navico Americas, will serve as treasurer and secretary, respectively.
Other officers and executive committee members include Carol McNern, treasurer of Explorer Pipeline Co., and David Carder, CFO of Cowen Construction, who will lead the Program Committee; Jim Dobson, CFO of Explorer Pipeline Co., who will serve as Career Services liaison; Keith Schroeder, CFO, Orchids Paper Products Co., who will lead the Membership Committee. Owen Pugh, senior vice-president of Cloud Neff Management LLC, and Brenda Berry, managing director-Tulsa of Resources Global, have been appointed to lead the Membership Retention and Communications Committees, respectively.
Keith H. Hazelton has been named senior vice president and director of economic research for the Oklahoma Bankers Association. Hazelton was previously associated with Bank of America and First Fidelity Bank in Oklahoma City following his relocation from Ohio in 2002. Keith graduated from Ohio State University in 1979 with a B.A. in journalism and in 1983 with a master’s concentrated in finance and economics.

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