Banking fraud is as old as the industry itself, and it continues to be one of the largest expenses faced by many financial institutions, according to Virginia Garcia, research director for Needham, Mass.-based TowerGroup. Garcia estimates that 30 percent to 50 percent of the industry’s $55 billion in annual operating losses is attributable to fraud.<\/p>\n","protected":false},"excerpt":{"rendered":"
“There are a couple of drivers that are convincing the banks to start rethinking some of their fraud management strategies,” Garcia says.<\/p>\n
While some “new” fraud simply relies on technology to commit old types of fraud in different or faster ways – for example, the use of e-mail rather than traditional mail to commit “Nigerian banking fraud” – new technology-enabled scams also are emerging. One method that banks are adopting to battle such fraud is multiple-layer authentication, according to Bill Harris, chairman of PassMark Security in Redwood City, Calif. “The banking industry has spent the past year-and-a-half determining what is the biggest problem – keylogging, phishing, e-mail or something else,” he says. “Traditional authentication methods aren’t enough,” he asserts.<\/p>\n
As a result, banks are using a greater array of information and multifactor analysis to lock down systems when fraud schemes are detected, Harris adds. User names and passwords should be supported in Internet banking transactions with new and better ways of authenticating genuine customers and identifying fraud artists trying to take over bank accounts, according to the summer update on identity theft from the Federal Deposit Insurance Corp. The extra security for online accounts often takes the form of multifactor authentication, which is used in addition to traditional passwords. The added security layers often include tokens issued to customers that generate new, random passwords every 60 seconds; software that can identify the computer from which a user is attempting to access an online account; or contacting customers by phone to make sure they legitimately are attempting to access their accounts.<\/p>\n
In bust-out schemes, perpetrators wait until the victims have built up a significant credit profile with their banks, then use stolen ID information to “bust out” with an auto loan or some other type of credit and leave town, explains Garcia.<\/p>\n
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