ALPENA – A large number of account holders at Alpena Alcona Credit Union discovered their accounts had been drained by fraudsters Wednesday through a third-party data breach.

President and CEO Donald Mills said the breach was not of member’s credit union records, but through records of an unnamed third-party vendor, where members have used their debit cards. He assured the public that money missing from the accounts would be fully refunded the same day when reported to the credit union.

He reiterated the fraudulent activity, which occurred with an undisclosed number of AAACU accounts, was not a breach of the credit union itself.

“It was a major retailer, but I can’t pinpoint which one at this time,” he said. “We have members who would come in and their checking account could be at zero. But their key is, when they contact us we’re immediately going to be crediting their account. No one is going to be out of any funds.”

Mills said AAACU knows exactly which cards are impacted in the breach, but didn’t specify how many.

“We have blocked those cards and we’re reissuing those cards to our members,” he said. “The key is no one is going to lose any money.”

None of the four other credit unions in Alpena reported any card fraud, or at least any beyond what’s typically seen at the holiday seasons. Thunder Bay Area Credit Union CEO Nick Montie said credit and debit card fraud typically spikes this time of year as it’s easier to conceal. Buyers tend to make lots of purchases at numerous businesses, and if they don’t keep close track of their accounts they may not catch fraudulent purchases until they see their next statement.

“Most of the fraud that we’re seeing this time of year, it’s not really gained in hacks from the financial institutions,” he said. “It’s data breaches on the merchant’s end, that’s usually where this comes from.”

Mills said this follows a rampant, nationwide trend of third-party data being breached for fraudulent purposes. Scammers are getting information in a few ways, including through skimming devices. The device stores credit card information after it’s swiped through it. The information is then sold to fraudsters who can then put the information on a phony card. Mills said the card can be used for a shopping spree.

Another way is through an untrustworthy employee who may take the information at the register, often by taking a picture of the card information, to make a fake card.

A third way the information is secured by fraudsters, Mills said, is simply by hacking through computer security of a third-party and then using that information to make fake cards.

Major hacks that nab credit or debit card information may not make the headlines for several months, either, Montie said.

For this particular data breach Mills could not say how much money was taken from cardholders at AAACU. He said there are some, however, who lost hundreds of dollars from their accounts. He said the timing as well is bad being so close to the holidays.

“It’s a shock for sure, and they need to contact us and we’ll immediately investigate it and put the money back into their accounts,” he said. “We are working with our member owners to assure that no one loses a penny, but it’s unfortunate that it happens at the holidays. It’s when people need their cards.”

Mills said a lot of the breaches would not occur if third-party agencies would have the same standards for protecting consumer information as the banks and credit unions did. He said this could be achieved by having secure computer networks, and keeping one step ahead of scammers.

“In general everyone should be on the alert this time of year in watching account balances and watching account activity regardless of their banking institution,” he said. “Thieves are out there and they’re looking for any vulnerability that is out there.”

Jason Ogden can be reached via email at jogden@thealpenanews.com or by phone at 358-5693. Follow Jason on Twitter @jo_alpenanews.

Jordan Travis can be reached via email at jtravis@thealpenanews.com or by phone at 358-5688. Follow Jordan on Twitter @jt_alpenanews. Read his blog, A Snowball’s Chance, at www.thealpenanews.com.