Thursday , March 28, 2024

Online Banking Falls Short in Identity Fraud Prevention, Study Shows

The financial institutions whose online banking sites are doing the best job of protecting customers from identity fraud are Bank of America, Citibank, E*Trade Bank, Washington Mutual, and Wells Fargo Bank, according to a study released today. These banks scored in the top five of 28 institutions whose online banking programs were evaluated by Javelin Strategy & Research, a Pleasanton, Calif.-based financial-services and payments research firm. The firm used a 100-point scale to calculate its rankings, which represent the second annual effort by the researcher to measure the effectiveness of online banking in protecting consumers and in giving consumers tools to protect themselves. The research behind Javelin's Online Banking Safety Scorecard reveals that banks still have room for improvement, the research firm says, despite the fact that losses from identity theft and bank fraud costs banks and consumers $52.6 billion annually. For example, nearly all of the banks surveyed offer zero-liability protection to their customers in instances of losses resulting from identity fraud. But none offers online-banking users the ability to limit or stop international or online transactions. Nor do any of the banks offer e-mail alerts that could tip off customers when changes occur in their credit-bureau data, an indicator of new-account identity fraud. Also, while the study says banks have upgraded customer education, it adds that most have not adopted multi-factor authentication (authentication that requires something more than a password) or alerts concerning other changes to personal information, including balance transfers or unusual account activity. “While financial institutions see the value in and continue to move towards implementation of security solutions aimed at prevention and detection of identity fraud, many still primarily emphasize after-the-fact resolution of identity fraud,” says Javelin in a statement.

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