Interview: Why Trailhead Credit Union Blocked Debit at Walmart

Interview: Why Trailhead Credit Union Blocked Debit at Walmart
Posted: Jan 19, 2017
Categories: Debit Cards, Fraud
Comments: 0
Author: Lou Grilli

Bold move by Oregon-based credit union stems the rapid rise in fraudulent card activities.

Due to high fraud one weekend at Walmart locations in California and Arizona, Trailhead Credit Union, a $110 million in asset credit union based in Portland, Oregon made the bold decision to stem the fraud by blocking their debit cards from being used at Walmart in those two states.

This decision was not made lightly; even though stores in their home state of Oregon were not blocked, Trailhead members vacationing or retired in those two states could be impacted.

ThePaymentsReview spoke with Jim McCarthy, CEO and Gail James, EVP about the decision process and its impact on their members.

ThePaymentsReview (TPR): Describe the steps leading to your decision to block debit transactions at Walmart stores.

TrailheadCU (TCU): First thing that Monday morning, we checked our reports from over the weekend and noticed about 50 fraudulent transactions, and all the transactions were in the $40-$60 range. We contacted our processor to confirm, and they showed that the fraudulent transactions had occurred at Walmart stores in Arizona and California. With the data in hand, we convened the senior team that morning and discussed the pros and cons, and made the decision to block the transactions. We requested our processor to change the appropriate authorization parameters to decline any further transactions from those stores, the request was completed that same day. Our marketing team first made sure that staff was notified, and that the call center was provided all the details; marketing then updated the website and reached out to members to notify them. We also ordered reissue of all cards that were counterfeited. This all happened that same day.

TPR: It sounds like you had procedures in place to deal with this type of situation ready to go. How did you execute so quickly?

TCU: We went through something similar before, when we noticed a high percentage of fraud stemming from cards that were used at ATMs located at 7-11’s. We blocked (and continue to block) ATM access at all 7-11 ATMs. 

TPR: You mentioned letting your call center know of the Walmart fraud in order for them to be prepared. Did the call center receive complaints from members that their cards were blocked?

TCU: Not a single complaint. We did receive a few calls into the call center from some of our members to let us know that they noticed suspicious transactions on their cards, but since the call center had already been apprised, the member was assured that the situation had been stopped, their card was being reissued, and they were not liable for any fraud.

TPR: There are studies that show that once a card is blocked and the cardholder has to use another card, that card falls from “top-of-wallet”. Was that a concern of yours in making your decision?

TCU: That was one of the cons brought up when we debated. But our members are pretty loyal to us and they understand that what we are doing is for a good reason. 99.9% of the members we spoke to were pleased that we took the necessary steps to protect our members and their accounts.

Blocking transactions is a bold move for an issuer; it can result in unhappy members, but not blocking transactions can result in fraud continuing, resulting in many more unhappy members.  Trailhead made the right decision, and executed it very quickly. What Trailhead accomplished should prompt CSCU member credit unions to have procedures in place to execute on should they find themselves in a similar situation. 


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Lou Grilli

Lou GrilliLou Grilli

Lou is the AVP of Product Development & Thought Leadership at Trellance. In this role, he is responsible for managing the organization’s product portfolio, as well as providing leadership on industry trends related to data analytics and payments.

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