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The "Upside" to Knowing Your Customer
by Mary Beth Guard, BOL Guru
We saw a news report this morning that illustrated once again how a smart employee with knowledge of customer habits can spot fraud and minimize losses. While some bankers complain about the regulatory requirements for identifying customers and understanding what constitutes "normal" transactions for them, and customers complain about lack of privacy when their transactions are scrutinized too closely, the fact is that sometimes it works to everyone's benefit.
This is an example of an instance where an alert and conscientious bank employee knew the customer so well that she was able to spot fraudulent transactions before the customer even became aware of them. According to the news report, eight automatic withdrawals had been made over a three week period from a customer's account by various Internet payment provider services. One of the bank employees believed the transactions might be fraudulent because she didn't think the customer even had a computer. An investigation ensued, and, sure enough, the transactions were not legitimate!
The method used by the crook here is indicative of a pattern ID thieves are using these days. They obtain a bank account number and a name and address to match it. Then they establish email accounts to match the name and address, paying for the email accounts with electronic withdrawals from the bank account. Armed with the account number and an email address, they order merchandise over the Internet, or set up person-to-person payment accounts in order to purchase goods.
These days, to catch a thief you need to be either high tech or high touch. Either know your customer well enough to spot transactions that don't make sense -- and act on that knowledge, or utilize one of the available automated systems for spotting fraud.
The sponsor of BOL's ID Fraud Center section, Primary Payment Systems, has an array of impressive tools for combatting check fraud and identity fraud. See for yourself what they could do to help you protect your institution and your customers.
First published on BankersOnline.com 6/19/03
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