What Insurance is Available to Protect My Bank Against Plastic Card Fraud Losses?
Plastic card fraud losses which include credit, debit and ATM cards cost banks billions of dollars each year, and the expense associated with these types of losses is on the rise.

The Financial Institution Bond (FI Bond) has a Debit Card Fraud Rider that typically covers debit card fraud losses that occur at an electronic swiping mechanism (merchant or ATM) within the United States. Coverage can usually be expanded to include worldwide. FI Bond carriers offer a single loss deductible which is usually equal to the FI Bond deductible or less if acceptable to insurer. Single loss limits are typically $100,000 to $500,000 per incident/occurrence of loss, not per fraudulent transaction. Keep in mind the Debit Card Fraud Rider may not cover fraud involving telephone, mail order or internet sales. In addition, most FI Bond carriers do not cover expenses associated with re-issuing cards, customer notification or credit monitoring. Some FI Bond carriers offer credit card fraud coverage in addition to debit card.

Another option is the broader stand-alone Plastic Card Fraud policy which covers credit, debit and ATM card fraud. This policy can be endorsed to include fraud involving telephone, mail order and internet sales. The deductible can be written as low as $10,000 for multiple cards losses or $1,500 if only one card is compromised. The typical annual aggregate limit is usually $500,000. This stand-alone policy can also include coverage for expenses associated with replacing compromised cards and notifying cardholders.

Talk to your card processor and inquire what internal and external controls or tools are available to limit and mitigate potential loss exposure. Review your Plastic Card Fraud Rider specimen policy language and compare that to the cost of purchasing the broader standalone policy.
If you are interested in finding out more about MBIS or the products available please contact Jeff Otteson at 608-217-5219 / jeffo@mbisllc.com or Adam Dawson at 952-857-2604 / adamd@mbisllc.com.