Identity fraud losses up 50% in 2012 - report

According to the “2013 Banking Identity Safety Scorecard” issued by US-based consultancy company Javelin Strategy & Research, the above mentioned fraud types impact consumers most severely and are historically more difficult for FIs to prevent and detect than any other major fraud type.

The report has also found that 5 of the top 25 FIs prohibit the use of the Social Security number (SSN) to authenticate a user’s identity, up from none in 2011. While this represents a major improvement, 20 percent adoption is still distressingly low, especially with account takeover fraud at a seven-year high. Yet, a promising consumer empowerment trend is finally gaining momentum among FIs – 40 percent of FIs are leveraging customers’ unique knowledge of their own financial behavior to prevent fraud by blocking types of transactions the customer knows he or she would never initiate. User-defined limits and prohibitions (UDLAPs) are a powerful supplement to behavioral and transaction monitoring.

Javelin’s scoring system for FIs’ identity safety capabilities is devised around the premise that preventive measures offer the greatest return to both the consumer and the FI. Prioritizing security features designed to prevent fraud can save FIs and consumers money well beyond the compromised funds themselves. While early detection, efficient and comprehensive resolution may mitigate the impact of frauds which have already occurred, successful prevention deflects fraud attempts, reducing the costs associated with detection and resolution.