The Tricky Business of Identity Theft Compliance

By Garmhausen, Steve | American Banker, April 8, 2008 | Go to article overview
Save to active project

The Tricky Business of Identity Theft Compliance

Garmhausen, Steve, American Banker

Conditioning bank employees to spot suspicious customer behavior may be the biggest single challenge in complying with new regulations aimed at curbing identity theft, bankers say.

As it is, customer service representatives have to ensure customers are who they say they are, and under regulations set to take effect Nov. 1, they will have to be on the lookout for additional red flags.

For example, if a customer wants to report an address change, a bank employee might take that now at face value. But under regulations set forth in the Fair and Accurate Credit Transactions Act of 2003, the employee might be required to ask a string of questions to verify the customers identity all while trying to serve the customer quickly and not keep others waiting.

Customer contact people must think about production, taking care of customers, and be focused on the fact that good customer service goes beyond greeting them, said Lisa Carter, the compliance officer at the $184 million-asset Bank of Virginia in Midlothian.

Roughly 50 of its employees from branch managers to loan officers to tellers and call center representatives will need to go through three hours of training to learn how to detect and prevent a customers identity from being stolen. That includes reinforcement through follow-up training.

In addition, Bank of Virginia is figuring on conducting a smaller amount of refresher training each year for all the employees, as well as the entire package of training for new employees as they join the bank, Ms. Carter said.

The training requirements are a result of the latest regulations to come out of the FACT Act.

Last fall federal agencies approved final regulations requiring banks to implement a system to identify warning signs that a customers identity is at risk of being stolen. By Nov. 1 banks must be able to demonstrate to regulators that they have policies and procedures in place to identify and deal with the warning signs, and they must show that their employees are ready to follow those policies and procedures.

That means, in part, creating a board-approved policy that directs managers to create a program, outlines its features, and commits the bank to training employees and educating customers.

More in depth than the policy are the procedures that each area of the bank will use to spot identity theft, along with the internal controls surrounding those procedures, according to Rick Haney, the compliance officer at the $186 million-asset North Shore Bank of Commerce in Duluth, Minn.

The internal controls i.e., who is going to monitor the red flags that is where you are going to have time and money spent, he said. Maintaining that is the part that really hits the bank hard.

Regulators have developed a list of 26 red flags for bank employees, ranging from warnings on credit reports to suspicious documentation and unusual purchasing patterns. (A full list of the interagency guidelines on spotting, preventing, and mitigating identity theft is linked to this story at

Much of the responsibility for spotting the red flags will fall on front-line employees, such as tellers and call center representatives. Mr. Haney said that ongoing training will be required, because turnover is highest in those positions.

Though training may be the main challenge, bank executives say developing policies and programs is a big job in and of itself.

Bank of Virginia is working off a policy and program model provided by the Virginia Association of Community Bankers, but Ms. Carter expects customizing those documents to fit her bank to take her a solid week of work.

According to BVS Performance Systems, a Cedar Rapids, Iowa, provider of training for banks, the regulation is flexible in that it requires banks to implement programs tailored to banks size and complexity, as well as the scope of its activities.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

The Tricky Business of Identity Theft Compliance


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?