Banks Take on the ID Theft Challenge: Financial Institutions Are Stepping Up Their Efforts to Protect Customer Identity and Account Information, Trying to Stay Ahead of Criminals Who Are Using New Technologies as Well as Old Techniques to Defraud Banks and Their Customers

By Britt, Phillip J. | The RMA Journal, October 2004 | Go to article overview

Banks Take on the ID Theft Challenge: Financial Institutions Are Stepping Up Their Efforts to Protect Customer Identity and Account Information, Trying to Stay Ahead of Criminals Who Are Using New Technologies as Well as Old Techniques to Defraud Banks and Their Customers


Britt, Phillip J., The RMA Journal


Zachary Keith Hill used fake e-mails and Web sites to steal 473 credit card numbers and 152 sets of bank account and bank routing numbers. Using that information, he stole $47,000 in goods and services. The case was settled earlier this year, and Hill received a 46-month prison sentence.

John Smith (not his real name) knows some of the workers for a large employer. One payday, Smith tells one of the workers that he's doing a study on checks and asks to have the check "for a minute," offering the car he's driving as security.

Smith copies the check using a handheld scanner. The next day Smith and his cohorts cash copies of the check at several of a bank's branches, taking between $10,000 and $30,000 in the scare. By the afternoon, Smith's check ring is flying to another city to perpetrate the same fraud.

The preceding anecdotes are just two examples of how scam artists are targeting banks and their customers to steal untold billions of dollars annually.

Identity theft is growing at an estimated 25% annually, according to Financial Insights, and accounts for more than 40% of consumer complaints to the Federal Trade Commission. The FDIC is compiling its own report on identity theft and fraud. The report should be finalized in the fourth quarter, says Sandra L. Thompson, deputy director of the FDIC's Division of Supervision and Consumer Protection.

Identity theft is usually the first step for a fraudster attempting to defraud banks and their customers through check kiting, check forgery, bogus credit and debit card charges, and a host of other schemes.

"Never has the financial services industry faced as prominent or widespread a fraud threat to its customers as identity theft," says Catherine A. Allen, CEO of BITS, the technology group for The Financial Services Roundtable. According to Celent Communications, identity theft is projected to cost U.S. financial institutions as much as $8 billion annually by 2005, and 48% of that amount will likely be from direct loss from fraud.

In late summer 2004, BITS and The Financial Services Roundtable launched the Identity Theft Assistance Center (ITAC) to help victims of identity theft. The nation's 48 largest financial institutions--there were 50 before recent mergers--were invited to join the effort.

Actual losses are probably much higher than the Celent Communications estimate, according to Bob Cofod, president of BANKDetect, which sells transaction analysis software that attempts to help users detect fraud attempts. Automated pattern analysis can quickly detect indications of most fraud scares. But many banks are still living in the past and think that write-offs for fraud losses are just a cost of doing business. This "acceptance" attitude helps perpetuate vulnerabilities that are pretty high risk in today's environment, Cofod says.

Beyond actual monetary losses, there are reputation risks to banks that become victims of identity theft. "An attack on any one bank can erode trust in other financial institutions," says Brian McGinley, head of loss management for $418 billion Wachovia Corp. "A large number of major banks have been victims of phishing and Web spoofs," he says.

Banks are one of the largest targets of phishing schemes, which, like the opening example of Zachary Hill, use seemingly legitimate e-mail messages and Web sites to deceive consumers into disclosing sensitive data, such as bank account information, Social Security numbers, credit card numbers, passwords, and personal identification numbers.

In most phishing schemes, the fraudulent e-mail message will request that recipients "update" or "validate" their financial or personal information in order to maintain their accounts, then direct them to a fraudulent Web site that may look very similar to the Web site of the legitimate business. These Web sites may include "spoofed" pages from legitimate Web sites to further trick consumers into thinking they are responding to a bona fide request. …

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

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.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Banks Take on the ID Theft Challenge: Financial Institutions Are Stepping Up Their Efforts to Protect Customer Identity and Account Information, Trying to Stay Ahead of Criminals Who Are Using New Technologies as Well as Old Techniques to Defraud Banks and Their Customers
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
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?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    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.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.