What Do You Know About ID Theft?

    July 1, 2005

Javelin Strategy & Research released the results of a recent study done in conjunction with the Better Business Bureau on ID Theft. The report, titled “Phishing: Consumer Awareness and Behavior.” The report concentrates on the action financial institutions must take to protect their customers from phishing scams.

The world of finance seems riddled with security problems. Major credit companies like MasterCard and Visa have their security compromised. Huge banks like Citicorp lose unencrypted tapes with vital credit information on them.

Javelin studied information from 40,000 consumers based on an online fraud and ID theft quiz. The quiz brought a number if interesting bits of information to light and credit card companies and consumers alike would do well to take note.

Their information included the following statistics:

10% of consumers still click on an embedded link upon receiving a suspicious email, believing that as long as they don’t enter any personal information they are safe. This is indication that banks must continue to make consumers aware of the latest phishing scams.

55% of consumers would delete suspicious email that asked for personal information immediately upon receipt. There is good awareness of the phishing problem – early educational campaigns among banks have worked as intended.

Phishing losses in the US in 2004 totaled roughly $367 Million. While this is certainly substantial, we focus also on the loss of trust and consumer movement away from the online channel that has resulted from the phishing epidemic.

29% of consumers would call or contact their bank upon receiving a suspicious email, and a further 28% would report it (via phone or other means) to their bank. The burden to call centers and other bank communication channels is heavy. Banks must take action to limit the costly behavior, yet still maintain the relationship with their account holder base.

Ecommerce is becoming a driving force in the U.S. and for that matter the world economy. Even many traditional brick and mortar establishments offer some type of online service. This says a couple of things about consumers and about the banking industry.

It says consumers know a lot but they need to know a lot more. As more and more electronic transactions happen, phishing can only continue to proliferate. While some consumers will go out of their way to learn what’s going on, most will not pay that much attention.

This is where the banking industry must exert greater effort. Banks must work harder to education and train their customers to be careful and make banks aware of these problems. The report suggests call centers are over loaded but the alternative is for customers to lose money, business declines and worst of all, faith in banking. History doesn’t report kindly on people losing faith in the banking industry because it’s happened before.

John Stith is a staff writer for WebProNews covering technology and business.