PLEASANTON, Calif.-With enforcement of the new Red Flag rules imminent, a new analysis suggests scammer are now seeking out other weak links.
The report from Javelin Strategy & Research found that the percentage of fraud victims whose accounts were taken over by change of address declined to 24% in 2009 from 66% in 2006 as institutions began to comply with the RFR requirement to provide an address change alert.
But just as financial institutions cracked down on this scam, fraudsters have quickly switched to using new registered usernames via online banking to take over accounts; the number of victims who were defrauded in this way tripled between 2008 and 2009.
"We suggest that the institution provide alerts that monitor for adding a user to an existing account," said Javelin Research Analyst Robert Vamosi. "It is a bit of following the criminal... but if we can do it with address change, we can do it for adding a user."
One of the best ways to combat fraud: provide members with tools to monitor their accounts, with Vamosi noting increased usage of online and mobile banking could be leveraged by providing an instantly adopted standard security package with a number of alert options to improve prevention.
Financial institutions would also do well to prohibit the use of full Social Security Numbers in online banking authentication, Vamosi said, as a keystroke logger could record those numbers and steal those identities.
"Offering a more comprehensive selection of SMS and e-mail alert capabilities and user-defined limits and prohibitions is a surefire way to give customers control to self-detect fraudulent activity," the report stated.
The report evaluated more than two-dozen of the largest card issuers in the country, giving Bank of America its highest overall ranking. But two large CUs, Pentagon FCU and Navy FCU, also held their own with Navy tieing for first in fraud resolution.
