account takeover and new-account fraud increases

In 2012, the total losses resulting from account takeover and new account fraud each rose by approximately 50% over the previous year. These two fraud types impact consumers most severely, and are historically more difficult for FIs to prevent and detect than any other major fraud type. One of the fastest-growing areas of fraud is so-called “new account” fraud, in which criminals use information stolen from consumers to open credit card accounts or gain credit for cars or high-end consumer goods such as furniture or home theater systems. That type of fraud rose by 50%, with more than $10 billion in losses, according to Javelin’s 2013 Identity Fraud Report, released today. For eight years, Javelin has evaluated the top 25 FIs by deposit size based on their consumer‐facing security features in the three fraud stages of Javelin’s Protection, Detection, and Resolution Model.

Javelin’s security research found that 5 of the top 25 FIs prohibit the use of the Social Security number (SSN) to authenticate a user’s identity, up from none in 2011. Javelin found that five of the top 25 U.S. financial institutions no longer use Social Security numbers to authenticate a user’s identity. Law enforcement officials say Social Security numbers are the Holy Grail to I.D. thieves, so taking them out of the equation is a big security help to banking customers.

While this represents a major improvement, 20% adoption is still distressingly low, especially with account takeover fraud at a seven‐year high. Yet, a promising consumer empowerment trend is finally gaining momentum among FIs – 40% of FIs are leveraging customers’ unique knowledge of their own financial behavior to prevent fraud by blocking types of transactions the customer knows he or she would never initiate. User-defined limits and prohibitions (UDLAPs) are a powerful security supplement to behavioral and transaction monitoring.

Fraud prevention is a winning security strategy to both attract and retain account holders, as consumers strongly value security when choosing a new institution and the perception of security is a critical factor in attrition.

“The best security model is one where FIs and their customers partner together in securing financial accounts,” said Al Pascual, Industry Analyst – Security, Risk & Fraud at Javelin Strategy & Research. “By focusing on educating and engaging the consumer in security authentication decisions and procedures, the FI can most effectively prevent attacks and threats from plaguing their valuable customer base.”

While early detection, efficient and comprehensive resolution may mitigate the impact of frauds which have already occurred, successful prevention deflects fraud attempts, reducing the costs associated with detection and resolution.

Javelin Strategy & Research’s 2013 Banking Identity Safety Scorecard evaluates financial institutions on their ability to prevent, detect and resolve emerging threats and attacks on their customers. It is based on the analysis of the top 25 financial institutions, by deposit size, based on their consumer‐facing security features and two online surveys of more than 11,000 consumers.

In News: 2013-Data Breaches & Cloud dramatically increase fraud levels in UK



Leading fraud consultancy UK Fraud (www.ukfraud.co.uk) has identified 10 key trends that will characterise the domestic fraud prevention market in 2013.


Bill Trueman, widely accepted as a leading fraud expert in Europe, has extensive experience in banking, insurance and financial services sectors. Turueman’s UK based consultancy, UKFraud, has an impressive international track record of eliminating the risk of fraud.

The trends are:

  1. With more high quality data becoming available to fraudsters than ever before, an economy forecast to contract and the UK’s benefits spend reducing, overall fraud levels will continue to increase dramatically across the UK and the rest of Europe. Fraud hotspots most likely to be affected in 2013 include: banks and card companies, insurers, online merchants, retailers and government be it HMRC, the universal credit scheme or local authorities.
  2. The types of fraud likely to see the biggest growth will be CNP (Card Not Present) card fraud, other forms of cybercrime, internal fraud, and supply chain fraud. Procurement fraud is also set to rise significantly. In contracting economies, evidence suggests that people inside this function can be put under pressure to defraud.
  3. Mortgage fraud is also set to surge in 2013, with credit rating experts pointing the finger at further rises in first-party fraud – i.e. where people misrepresent their finances whilst applying for mortgages. Once again the economic climate is a significant contributor in this. 
  4. Recent spectacular mass data breaches and suspicion of cloud security in some areas will continue. An increasingly greater emphasis will be placed upon PCI DSS and other data security and integrity issues. Already, the daily number of automated attacks on bank and retailer systems runs into the millions, which means that we will continue to see major high-profile data breaches both reported and otherwise.
  5. Solutions will be based around systems for acquirers, online merchants and PSPs, who are regularly the victims of CNP fraud – where fraud is growing fast in line with the growth in internet based payments. Increasingly, solutions will move to better and newer generations of screening, scoring and risk based monitoring, such as those based upon Bayesian based fraud detection systems. These will start to pose a real challenge to older systems based on ‘so called’ Neural Networks. 
  6. Most people feel that there could be a lack of unified central direction and strategy from government. The lack of a pan-European strategy will also prevail. The UK government’s response is divided between the NFA, the Cyber Crimes unit and the Cabinet Office’s FED (Fraud Error and Debt Initiative). Some believe passionately that the lack of a unified central government strategy will drive up fraud significantly in 2013. On the positive side, at least some of the civil servants who have been involved in the NFA since the beginning are starting to gain real experience of the sector and an appreciation of the enormous challenges they face. The DWP is also tendering to get some real-world fraud strategy skills into their midst too, which should prove invaluable given the changes due with the Universal Credit. 
  7. The USA is increasingly ready for a policy U-turn on the adoption of signature as the CVM of choice. The US market will find it increasingly difficult to evolve in a global payment systems world without the protections offered either by PINs – or a ‘next generation’ solution. As the rest of the world is moving (or largely has moved) in this direction already, 2013 could see this U-turn as fraud increasingly migrates to the US. 
  8. Major insurers will continue to develop a strong and very credible fraud prevention solution based around the ‘front end’ (underwriting stage of business) The emphasis on delivering a strong industry wide data-sharing drive will also continue to increase; although a whole re-think of the industry fraud register will be needed to address Data Protection Act requirements. 
  9. There will be a major shift in the presence, position and fraud service offerings of one or more of the major data-bureaux (such as credit reference agencies), as more solutions either move ‘in-house’ or move to systems developed by a host of new players in various fraud sectors. 
  10. And there will be some surprises as there always are – whether they are policemen ‘on-the-take’, another raft of politicians fiddling their expenses, or further high profile banks brought to their knees by (usually) rogue traders.

“The current economic climate is driving change and there is an evolution in the world of fraud prevention that we have not seen before,” Says Bill Trueman, CEO of UK Fraud. “However, if we are to stay ahead of the fraudster, we have to be able to read these trends and manage both our strategy and the risks accordingly. In highlighting what we see as the trends, we aim to contribute to the debate and raise awareness of the risks. By keeping this debate alive we hope that fraud prevention will shortly gain an even greater emphasis in key seats of power – be that in the boardroom or within key government departments.”

UKFraud is a leading UK based consultancy, with an impressive international track record of eliminating the risk of fraud. Its founder Bill Trueman is widely accepted as one of Europe’s leading fraud experts and a frequent commentator and writer on the issues involved. Trueman has extensive experience of the banking, insurance and the financial services sectors and is a thought leader at the forefront of many industry wide and international debates.

Tips for Avoiding Credit Card Fraud: FBI

FBI’s tips to avoid a credit card fraud

  • Don’t give out your credit card number online unless the site is a secure and reputable. Sometimes a tiny icon of a padlock appears to symbolize a higher level of security to transmit data. This icon is not a guarantee of a secure site, but provides some assurance.

  • Don’t trust a site just because it claims to be secure.
  • Before using the site, check out the security/encryption software it uses.
  • Make sure you are purchasing merchandise from a reputable source.
  • Do your homework on the individual or company to ensure that they are legitimate.
  • Obtain a physical address rather than simply a post office box and a telephone number, and call the seller to see if the telephone number is correct and working.
  • Send an e-mail to the seller to make sure the e-mail address is active, and be wary of those that utilize free e-mail services where a credit card wasn’t required to open the account.
  • Consider not purchasing from sellers who won’t provide you with this type of information.
  • Check with the Better Business Bureau from the seller’s area.
  • Check out other websites regarding this person/company.
  • Don’t judge a person or company by their website. Flashy websites can be set up quickly.
  • Be cautious when responding to special investment offers, especially through unsolicited e-mail.
  • Be cautious when dealing with individuals/companies from outside your own country.
  • If possible, purchase items online using your credit card, because you can often dispute the charges if something goes wrong.

  • Make sure the transaction is secure when you electronically send your credit card number.
  • Keep a list of all your credit cards and account information along with the card issuer’s contact information. If anything looks suspicious or you lose your credit card(s), contact the card issuer immediately.