The Federal Trade Commission recently published its annual 2011 report on consumer complaints. The report, “Consumer Sentinel Network Data Book,” lays out in extensive detail the types and frequencies of reported complaints to the FTC from consumers. Here are a few pertinent points from the report:
- The CSN received over 1.8 million complaints during calendar year 2011
- Identity theft was the number one complaint category in the CSN for calendar year
- A total of 990,242 in 2011 complaints were fraud-related
- For military consumers, identity theft was the number one complaint category
- Government documents/benefits fraud (27%) was the most common form of reported identity theft, followed by credit card fraud (14%), phone or utilities fraud (13%), and bank fraud (9%). Other significant categories of identity theft reported by victims were employment fraud (8%) and loan fraud (3%).
Personally, I think it is very telling that the top two complaints are identity theft and fraud. These two categories are inherently related, connected at the hip, if you will, because criminals essentially steal identities to commit fraud.
The second important takeaway for me was that despite all of the heavy investment banks and other institutions are making to safeguard customer information, particularly in the online channels, identity theft and fraud continue to proliferate. This is quite alarming.
Over the past several months, I’ve written a number of blogs that talk about the need to bake cyber security and risk management into all customer channels, including ATMs, Internet and the telephone.
One of the reasons telephone fraud and social engineering have picked up in recent years is the fact that criminals now have the ability to access or change an address or account data that is necessary to perpetrate larger and more profitable online crimes. Once a criminal controls a customer’s information – primarily through the telephone channel – criminals use the newly acquired personally identifiable information (PII) to commit crimes through the online channel.
Financial Institutions that ignore the telephone channel as a primary source for fraud and don’t address the same security and authentication requirements as the online channel, will continue to put themselves at risk as the CSN report painfully articulates.
The fact is, if you want to automate business processes, enhance customer communications, and take advantage of new technologies, you have to “bake” cyber security and risk management across all customer channels.
Deploying an effective, non-intrusive identity authentication tool like the TrustID® network-based Physical Caller Authentication enables financial institutions to convert ANI and Caller ID into a powerful physical security and customer authentication tool that can be used to close the security gap that too many bank call centers still operate with today.
An identity authentication solution that helps banking institutions protect the telephone channel by making the phone number a valid “Something you have” authentication credential, is an essential piece of the FFIEC’s multi-factor authentication paradigm for identifying customers. By automatically validating the physical location of the caller before the phone is answered, financial institutions proactively identify fraudulent calls and address good customer inquiries faster, all without putting them through burdensome telephone interrogations that are required by other knowledge-based authentication (KBA) solutions.