How Much ID Theft Starts on the Web?

Last week, Javelin Strategy & Research released a study on identity theft. This reinforces some earlier reports we've read indicating that the majority of the theft does not start with those phishing emails or phony web sites. Despite some recent big losses at E-Trade Financial Corp. and TD Ameritrade, Javelin reports that 90 percent of the thefts start with the "old school" methods involving stolen bank statements, credit card bills, stolen checks and passwords, as examples. "The Internet always grabs the headlines, but it is individuals who are close to the victims, such as family and friends, that are doing most of it," said James Van Dyke, president of Javelin.

One in ten cases starts with the Web, email, a faked web site, or some other means of obtaining confidential consumer information. Javelin reports four percent of Americans were affected by identity theft in 2005. While this number is decreasing, the amount of each loss is growing. So there are fewer losers, but more losses.

While these numbers may influence your collateral materials and talk-offs to point your customers in the right direction for their own data security, financial institutions must remain ever vigilant in your own efforts. You must protect your customer data and you must encourage the customer to do the same. Even if a customer suffers a loss due to their own negligence, you may suffer the blame in whole or in part, and may still lose that customer as they try to re-establish themselves, but at another institution.

Promote to your customer what you are doing. Tout your efforts in multifactor authentication, tell the customer what you will be doing in the near future and what you won't be doing. Tell them you won't be asking them for their account number, SSN or debit card information. Tell them scammers out there may, and how they should contact you in the event someone does target them. Sometimes the best defense, is a good offense.