Thursday, February 11, 2010
On Feb. 10, 2010, Javelin Strategy and Research released the results of its sixth annual 2010 Identity Fraud Survey. This year's study, which polled over 29,000 consumer victims of fraud (including some small and mid-sized business owners), revealed that fraud is on the rise, but so are the preventative efforts of financial institutions and consumers alike who are working together to safeguard personal information from savvy cyber thieves.
According to James Van Dyke, founder and President of Javelin Research, identity fraud requires a level of partnership that has up to now been lacking in financial services. "ID fraud crimes uniquely target both consumers (cardholders) and providers (issuers, processors and acquirers) because identity criminals impersonate cardholders to extract money from consumers, businesses and all manner of payments industry companies," he said.
Javelin believes ISOs, processors, networks, issuers and vendors must continue to be proactive to better assist individual and corporate cardholders "in the fight against a common enemy while continuing to evolve best-of-breed back-end solutions that prevent, detect and resolve identity fraud." Accomplishing this will require payment companies to develop more robust product capabilities, as well as to emphasize education.
"What we feel with this study is that there absolutely are actionable findings in this report for payment professionals," Van Dyke said. "Fraud mitigation is about more than just reduced losses. Javelin data shows that protection against ID fraud is the primary factor that causes consumers to select a particular new issuer or select an existing card out-of-wallet.
"Our report provides information that industry professionals generally don't have yet, because our research has caused us to create the unique partnered mitigation models upon which dozens of highly specific recommendations are made and measured."
The study found that:
Javelin recommends that payments industry information security professionals weigh opportunities to expand their transaction and security services in the health care industry, which has a lower number of transactions but a higher fraud rate percentage than the payment and banking sectors.
Van Dyke said total losses from ID fraud amount to about $54 billion – not counting the cost of mitigation systems, lost customers and damaged brands – but that there is much potential for improvement.
"ID fraud is a factor with significant impact on the bottom line of every issuer, processor, acquirer and industry vendor, and Javelin believes strongly that companies can improve their results tremendously by applying the results of this study," Van Dyke said.
"Consumers want more control, so we must stop perpetuating the myth that zero liability provisions somehow obviate consumer willingness to do their part. In crimes of impersonation, partner-oriented mitigation solutions are the way forward."
For more information, visit www.javelinstrategy.com .
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