Fighting Fraud Takes a Mix of Tools

by Bryan Ansley


Several weeks ago, in a stunning announcement, the Department of Justice uncovered the largest identity theft case in U.S. history. According to the initial report ,11 people were arrested and accused of stealing 41 million credit card numbers by hacking into nine major US corporations' wireless networks.

Along with credit card numbers, prosecutors claim the fraudsters took passwords and personal account details and sold it all online. It's apparent that America's biggest retail corporations have not implemented adequate information technology security measures to protect consumers from identity theft. More appalling is the fact that, according to a June InformationWeek study, 21 percent of U.S. companies have never even conducted an initial risk assessment to prevent situations like this from occurring.

As consumers are scrambling to find an identity theft solution, financial institutions are faced with a unique situation; now is the perfect opportunity to supplement service offerings with identity theft protection packages. The financial community can literally save the day by implementing policies and procedures that make safeguarding a customer's identity a top priority.

Choosing this route, the financial community will rely heavily on high-tech tools to mitigate and deter identity theft damage to the victims. Services like new account authentication, change of address verification, anti-phishing detection, take-down programs and identity monitoring solutions are just some of the key aspects of a total fraud prevention package.

However, as criminals don't always resort to state-of-the-art fraud methods, it's also important to have techniques to fight low-tech criminal activities that can happen inside call-in customer support centers or within mail-in correspondence. Here is where staff training plays a pivotal role as financial institutions seek to sharpen overall fraud detection skills. Training must be implemented at all levels. And it's important that managers know the skills their tellers and lower-level staff are using so they can constantly improve those fraud detection talents.

Compliance with new anti-fraud regulations will also require staff training. In late 2007, the Federal Reserve issued the Red Flag rule which requires all financial institutions to develop measures to mitigate the risks of identity theft. The new regulation requires that financial institutions increase operational efficiencies while decreasing fraud risk. To ensure this condition is met, financial institutions must engage in anti-fraud employee training.

Remaining compliant means employees should receive recurring training and updates on a mix of strategies dealing with common red flags, such as customer information mismatches, pattern usage issues and change of address and passwords situations. When done effectively, staff training goes beyond satisfying the regulation; it adds value that will retain current customers and attract new ones.

The greatest line of defense for low-tech fraud is a well-trained teller. Using anti-fraud training, lower-level employees will be able to root out suspicious mailings, phone calls and customer behaviors before they can potentially result in lost time and money.

With the current economic downturn, many financial institutions will back away from employee training. However, in the face of current identity theft risks, now is not the time to let the guard down. If the logistics involved with staff training seem overwhelming, go outside the organization to find anti-fraud training support. By becoming a strong consumer identity theft advocate, financial institutions can benefit immensely if they act now.

Secure Identity Systems is the only company in the U.S. that offers the end-to-end solution for Red Flag compliance including: Initial Risk Assessment, Policies and Procedures Manual, New Account Authentication, Change of Address Verification, Identity Theft Protection with fully managed recovery, On-site Staff Training, and an Anti-Phishing Program. For additional information, please call (615) 377-7661, or e-mail: bansley@secureidentitysystems.com.

First published on BankersOnline.com 8/25/08