Perfect Storm of Fraud
When going through recent financial news, I became overwhelmed at the fraud issues I saw. I came across this article on the cost of stolen cards to fraudsters. When combined with this study on fraud losses, and the 2010 Javelin report on individuals foregoing identity fraud prevention, we could be witnessing the golden age of the fraud economy. Good attacks, cheap identities, low public interest? No wonder banks pay three dollars for every dollar stolen!
Combating this storm is going to fall on the bankers. It’s time to look at fraud solutions. The first concern is that with the kind of data available in Kreb’s article (Date of Birth, Maiden’s Mother Name, etc). ), how how is your account management process insulated? Nothing compromises the industry standard challenge questions like alternative data sets. If you aren’t using a multi-factor authentication tool, then you are relying on the same questions that www.rock3d.cc is answering for a mere $2.10! Multi-factor can take the routine data gathered to provision an account and get back to the real account holder. Wiring an entire balance out of an account? Opening a second and third credit line? Changing the challenges? These aren’t common activities and customers will be reassured by the added security.
The second concern is that the information stolen will be used not just for retail purchases. If a stolen ID has enough credit to establish the card that was just purchased, why not open a few more revolving tradelines? This is where a graduated fraud policy protects from fraud loss. Protect against a valid SSN with a fraudster’s name and address with a synthetic fraud solution. If the fraudster tries using the information to commit true name fraud, challenge not with compromised “In wallet” questions that can be answered via Trojan data. Get questions based on the rarely thought about “out of wallet” data. The process is more invasive but if you have optimized your approach, you will get the maximum bang-for-your-buck while minimizing customer impact.
Individuals are pinching purses on fraud prevention while the Zeus attacks are feeding the global ID theft economy. Knowledge Based and Multi-Factor Authentication solutions inside of a comprehensive, progressive fraud policy keep fraud costs down and keep customers trusting in the largest growth channel of banking.
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