Where Everybody Wants Your Name (and Date of Birth and Social Security Number and …)
Identity theft or identity fraud, the terms commonly used to refer to criminal activity in which someone wrongfully obtains and uses another person’s personal data, continues to rise. According to recent research from Javelin, approximately 15.4 million people were victims of identity fraud in 2016, up 2.3 million incidents from their 2015 results. What’s more telling is that this fraud resulted in approximately $16 billion of fraud losses in 2016.
How Do They Do It?
There is evidence from recent trends that new account fraud is increasing. This approach involves using the identity of another person to open new accounts, typically loans, and then work to secure those approved loan funds (in other words, to get the associated loan limits in the form of cash). This can happen through securing a new car loan, opening lines of credit, or even securing credit cards attached to another person’s identity.
This last area of fraud exposes the potential to criminals through card-not-present fraud. In this way, criminals avoid using cards at a point-of-sale terminal. Following implementation of EMV, Canada experienced an increase of 30.1% in card-not-present fraud, while Australia experienced an increase of 126.1%. This fraud is driven by improvements in card-present security, but offset by easier access to e-commerce and mobile platforms. At the same time, consumers want less friction at check-out, driving some retailers and card providers to reduce security mechanisms.
There are some easy ways to protect individuals, and some steps Financial Institutions can take as well. For consumers, being aware on social media is a big factor, and over-sharing can invite problems. Good password habits are important, not using the same username and passwords on multiple sites. Consumers can also implement multi-factor authentication on many e-commerce and internet-based platforms, as well as signing up for account alerts when activity happens. In these ways, awareness of potential fraud allows quick responses, and authentication measures can keep fraudsters out.
Financial institutions should be aware of ways that fraud can occur, and take steps to educate staff and limit access to loan funds. While not always an easy approach as it goes against customer-service standards, limitations to access funds can help prevent fraud. For Financial Institutions that allow online account opening and provide loan funding, taking additional steps can help to mitigate potential losses, including having accountholders appear in a branch to confirm identity. While no measure will be without inconvenience, the potential exposure to a Financial Institution is often the loan limit of disbursed funds.
Make Sure Your Financial Institution Clients Have the Right Coverage for Protection Against Fraud
As fraud trends continue to develop, we will work to provide appropriate notice to provide awareness. Often, losses develop in different ways, and how a loss happens often dictates available coverage. The goal of any insurance program is to address areas of fraud that occur, but not all fraud is covered. Knowing how policies and procedures will impact coverage is an important step to ensuring appropriate insurance is purchased. Contact any one of the FI insurance experts below for help in making sure your FI customers have the right coverage from a strong, stable company!
VP Sales and Distribution
Jon Martin 410-372-6325
Contact: Jon Martin 410-372-6325
Jeanne Shrum 207-415-4587
Scott Harris 512-800-5393
Dave Cassel 443-987-8619
Pete Verretto 206-802-3076
Experts focused on your protection.
Products and services are provided by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued. Certain coverages may be provided through surplus lines insurance company subsidiaries of W. R. Berkley Corporation through licensed surplus lines brokers. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds.
For additional information concerning W.R. Berkley Corporation’s insurance company subsidiaries, please visit: http://wrbc.info/