Banks Join the Fight Against Identity Theft

Identity theft is on the increase. E RADAR's Jim Richardson looks at the issue from a US perspective and how some consumers may be losing out to the online fraudsters

Identity thieves are growing more sophisticated, and they're preying on many people through their connection to their banks. The results are disastrous and costly: Identity theft costs consumers more than $1.5 billion in 2011, an increase of over $400 million from the previous year. Straightening the mess out is frustrating and at times, not possible.

How Can It Happen?

  • Bank employees sell personal information for profit;
  • Account information is taken from the trash at an individual's home;
  • Cyberthieves target bank employees with phishing emails and spam that install keystroke loggers and remote access trojans, enabling them to commit fraudulent wire transfers

Often, victims of identity theft do not realize they've been robbed for days or even weeks after the theft occurs. That not only harms the consumer, it also limits authorities and banks in finding who is responsible.

Prevention of Identity Theft

Credit card

Credit card (Photo credit: Wikipedia)

Several LifeLock videos explain the methods a financial institution can use to try to prevent identity crime. Most banks offer customers account alerts if any suspicious activity is noticed or if someone is attempting to gain access to the account. Without this alert, if money is stolen, the victim may not realize for weeks at a time that they have been robbed, and in the meantime, they may have to live without those funds until some resolution is reached by the bank and law enforcement. Thieves can get hundreds of thousands of dollars from different bank accounts without leaving their own home and feel that they aren’t hurting “the little guy” with their illegal activities. However, just as retail stores figure in losses from shoplifting into the cost of their goods, banks figure in theft and additional security costs into the charges that they pass on to the consumer.

Legal Protections for Consumers May Be Limited

Consumers do have protections from theft directly from a bank account, but those protections are limited. If a theft isn’t detected within the first 60 days after the money is stolen, banks are not required to offer restitution. When money is taken from a credit card, or charges are illegally made on a credit card, there are additional protections; however, when a stolen debit card is used, the consumer can expect few consumer protections. That is one reason why it is so important to have protection that will check accounts daily for fraudulent activities. The protection isn’t just for the consumer and the bank, but it also offers peace of mind. Identity theft and the ensuing loss of money is becoming a larger, not a smaller problem. Thieves realize that they can steal more money through online theft than they could ever get by walking into a bank with gun and stealing; and online theft is much less dangerous. It has become incumbent on consumers to do all they can to protect their own assets.