Banks better at thwarting fraud

(fraud).

via Moak: Banks better at thwarting fraud, clarionledger.com, 2/3/2016

PDF: Banks getting better at fighting fraud

Banks are usually pretty peaceful places. Visit a local branch, and you will probably find a calm environment, hopefully with friendly people and nice surroundings. But behind the scenes of most banks, a constant battle against fraud is raging. Constantly, people are attempting to commit all types of bank fraud, and all banks work hard to ensure most of these fail. And fail they do, most of the time.

On Wednesday, the American Bankers Association issued an amazing statistic: During 2014, U.S. banks stopped more than $8 of every $10 of attempted deposit account fraud. That information was included in a report with the ponderous title of the 2015 American Bankers Association Deposit Account Fraud Survey Report.The survey included data from 101 banks nationwide.

According to the ABA, fraudsters attempted $13 billion in bank fraud, and bank security measures were credited with stopping $11 billion which might have been stolen.

“Banks’ sophisticated fraud prevention systems and customer vigilance successfully stopped 85 percent of fraud attempts in 2014,” said Doug Johnson, senior vice president, payments and cybersecurity policy at ABA. “We saw an increase in fraud losses in 2014 most likely due to the number of large-scale retailer data breaches, which resulted in a significant increase in attempted debit card fraud.”

Since banks bear much of the financial responsibility when fraud occurs, it’s a big problem. Even with an 85 percent success rate, fraud against bank deposit accounts cost the industry $1.9 billion in losses during 2014, an increase from $1.7 billion in 2012.

Much of that fraud (66 percent) was incurred on debit card accounts, such as counterfeit cards, card-not-present transactions, and lost or stolen cards. Paper check fraud still accounted for nearly a third of the remainder, even though the use of paper checks is declining as electronic transactions increase. The most common check fraud categories were counterfeit checks and return deposited items. The rest involved wire and other types of electronic banking.

Apparently, though, online security is getting better. Even as thieves attempted to defeat online security measures, they were thwarted more often, leading to a “significant” drop in losses during the year; your chance of being affected by online banking fraud is fewer than 1 in 1,000.

“Banks recognize that many customers are moving online to perform banking transactions and have invested billions of dollars to create very effective online fraud prevention systems that include features like multi-factor authentication and monitoring IP addresses,” Johnson noted.

To help make sure you don’t become a victim of bank fraud, the ABA recommends these tips:

  • Don’t share your secrets. Don’t provide your Social Security number or account information to anyone who contacts you online or over the phone. Protect your PINs and passwords and do not share them with anyone. Use a combination of letters and numbers for your passwords and change them periodically. Do not reveal sensitive or personal information on social networking sites.
  • Shred sensitive papers. Shred receipts, bank statements and unused credit card offers before throwing them away. (A number of organizations periodically offer community shredding events, in which they’ll destroy your documents for free.)
  • Monitor your accounts regularly. Rather than waiting for your monthly statement, use online banking to monitor transactions on your account regularly. If you see a fraudulent transaction, notify your bank immediately.
  • Sign up for text alerts. Sign up for text or email alerts from your bank for certain types of transactions, such as online purchases or transactions of more than $500.
  • Protect your mobile device. Use the passcode lock on your smartphone and other devices. This will make it more difficult for thieves to access your information if your device is lost or stolen. Before you donate, sell or trade your mobile device, be sure to wipe it using specialized software or using the manufacturer’s recommended technique. Some software allows you to wipe your device remotely if it is lost or stolen. Use caution when downloading apps, as they may contain malware and avoid opening links and attachments — especially for senders you don’t know.
  • Keep an eye out for missing mail. Fraudsters look for monthly bank or credit card statements or other mail containing your financial information. Consider enrolling in online banking to reduce the likelihood of paper statements being stolen. Also, don’t mail bills from your own mailbox with the flag up.
  • Monitor your credit report. Order a free copy of your credit report every four months from one of the three credit reporting agencies at annualcreditreport.com.
  • Protect your computer. Make sure the virus protection software on your computer is active and up to date. When conducting business online, make sure your browser’s padlock or key icon is active. Also look for an “s” after the “http” to be sure the website is secure.
  • Report any suspected fraud to your bank immediately.

For more on stopping bank fraud, visit http://www.aba.com.

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