Financial Crisis: Identity Theft Puts Banks at Greater Risk
by Bryan Ansley
There is a direct correlation between a slowing economy and an increase in crime. With last week's announcement of the Lehman Brother's collapse and the impending financial crisis we expect to see a spike in fraudulent identity usage in the aftermath which puts banks at a greater risk.
Identity theft is the fastest growing crime in America with reports of breaches hitting the news every day. FBI statistics show United States companies spend $67 billion annually combating cyber crime and consumers lose $50 billion to identity theft and recovery expenses every year, according to the Federal Trade Commission. Customers are becoming increasingly aware of the threat to themselves and their families. According to a recent survey, 50 percent of Americans said they would switch financial institutions for better protection. It is critical for financial institutions to have the right processes in place to protect their customers and safeguard the bank.
Regulators know that banks can play a pivotal role in the fight against identity fraud by implementing the new regulatory requirements. Yesterday's tools and technologies are not effective in combating identity theft. Under the new regulation banks must now offer some type of identity theft protection for all accounts.
An effective identity theft programs should include four key components:
- Fully Managed ID Theft Resolution: A personal Resolution Advocate to work with the victim and perform all steps required to clear their good name. The Resolution Advocate should be available to answer any questions or concerns the victim may have throughout the entire recovery process.
- Total ID Monitoring: Since 2/3 of Identity Theft is not detected by the credit bureaus, and effective ID Theft program must do more than monitor the credit bureaus. Other databases that will provide early warning of possible breach include: The Social Security Administration, The DMV, Court and Public Records, Utilities, The U.S. Post Office, and phone companies.
- Education: Consumers must be educated on steps they can take to reduce and prevent ID theft. As a first step, an educated customer can be a key to deterring identity theft. Once people know how to detect attacks, they will become a first line of defense. In the past, most of the successes with taking down fraudsters in a timely manner have resulted from the outpouring of consumer reports.
- Expense Reimbursement Insurance: Reimburse the victim for out of pocket expenses that are due to the cleaning up of an identity theft event. With various types of identity theft attacks on the rise, financial institutions need a strong security blanket across where customers can be vulnerable; this will ensure perpetrators of identity theft schemes aren't able to open or modify existing financial accounts with the information obtained from victims.
Secure Identity Systems is the only company in the U.S. that offers the end-to-end solution for Red Flag compliance including: Initial Risk Assessment, Policies and Procedures Manual, New Account Authentication, Change of Address Verification, Identity Theft Protection with fully managed recovery, On-site Staff Training, and an Anti-Phishing Program. For additional information, please call (615) 377-7661, or e-mail: email@example.com.
First published on BankersOnline.com 10/06/08
First published on 10/06/2008