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Identity Fraud Safety Scorecard - Banks’ Identity Fraud Safety Scorecard Reveals Measured Success and Bountiful Opportunities For Improvement
Javelin Strategy & Research, Nov 2004, Pages: 24
Banks’ Identity Fraud Safety Scorecard Reveals Measured Success and Bountiful
Opportunities for Improvement
Amidst areas of progress, the banking industry is lacking many basic online identity fraud mitigation capabilities, within the three categories that we have created as a model for increasing safety: prevention, detection and resolution. The absence of essential safety capabilities places customers at undue risk of identity theft and fraud, and causes unnecessary and escalating costs for banks and the banking industry.
Background:
40 banks were scored on their online identity theft prevention, detection and resolution capabilities. This report is designed to highlight industry-wide and bank specific areas for improvement that would help contain the estimated $47 billion per year costs associated with identity theft and fraud. Banks individually and collectively must take meaningful steps to reduce customers’ exposure to identity theft and fraud. This report provides recommendations, that if implemented will help prevent and detect identity theft, and tips for improving online resolution capabilities for those that have become victims.
The study shows that a few banks have focused on resolution but to contain the threat, they must “deputize” customers to help prevent and detect identity theft and related fraud. Security and safety issues are the primary concerns of consumers and this report shows how banks can do more to improve consumer confidence and mitigate the risk of identity theft and bank fraud.
A mystery shopper approach was used to score banks on a 100 point scale that included more than 40 categories of capabilities which banks could implement, but generally do not offer currently.
Key findings show that many banks are not offering important capabilities to prevent and detect identity fraud. At more than half of all banks, consumers do not currently have the option of eliminating paper statements—a significant root cause of identity theft. Seventy three percent of consumers surveyed highly value email alerts relating to unusual bank account transactions, yet incredibly, few of the 40 banks polled delivered such alerts. In addition, 72% of the customers surveyed want the ability to receive immediate electronic alerts of suspicious transactions in a credit or debit card account and only one bank—Bank One—offered the service. Some banks are offering online email alerts, but they often lack sophistication and are typically targeting convenience oriented information such as bill payment confirmation or simple account balance updates.
The data shows that 85% of banks are prominently posting security tips and identity theft resolution information online, but only 55% post information on identity theft resulting from traditional “offline” sources such as stolen mail or persons previously known to the victim—which are also highly common and difficult to detect. Because much identity fraud can be prevented through better education, we believe that 100% of institutions should display such information on their Web site, for crimes that originate from both Internet and traditional sources.
Based on information provided by banks’ own customer service representatives, none offer email alerts of changes to credit bureau information, an important indicator of new account identity fraud, while nearly half of all online households surveyed indicate that they would value this type of notification. Banks are woefully lacking in customer driven alerts regarding changes to personal information, balance transfers and unusual account activity. Out of all the banks surveyed, only Wells Fargo and E*Trade offer their customers the capability to sign up for email alerts when personal information has been altered.
It is important to note that banks are working hard to protect their customers. The following institutions topped the list of best performers on our Identity Fraud Safety Scorecard:
1. Bank of America
2. Wells Fargo Bank
3. E*Trade (tie)
4. Zions Bank (tie)
5. Navy Federal Credit Union
6. Citibank
7. PNC
8. US Bank
9. USAA
10. AmSouth (tie)
11. HSBC (tie)
Who should read this report?
- Banks
- Brokers
- Credit Bureaus,
- Technology Vendors
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