• TABLE OF CONTENTS •
What is New Account Fraud?
New Account Fraud Stats
The Link between Identity Theft and New Account Fraud
Why New Account Fraud is so Attractive to Criminals
Why New Account Fraud is Difficult to Detect
New Account Fraud Prevention Tips
It is often said that the act of counterfeiting money is as old as money itself. No matter the type of currency used throughout history – whether it was the metal coins used in Lydia in 640BC or the cowry shells that were used as currency in Orissa, India until 1805 – there was sure to be someone intentionally attempting to pass off a counterfeit version as the real thing.
An estimated 9 million American identities are stolen each year – it’s no wonder why identity theft is the #1 complaint amongst American consumers, according to the Federal Trade Commission (FTC).
Although dealing with identity theft and fraud is akin to addressing the elephant in the room – no one wants to do it – it is becoming increasingly important that businesses, particularly those in the banking industry, take the lead in providing fraud prevention solutions for their customers, lest they want to miss out on profiting from the biggest generation since the Baby Boomers: the Millennials.
Millennials, unlike previous generations, live and breathe technology. And this coupled with the fact that rampant rates of identity theft and fraud have left American consumers – no matter which generation they’re from – fearing identity theft the most whenever they’re online, means that preventing and addressing security concerns needs to be a priority when attempting to attract this upcoming technology-dependent generation as customers.
Earlier this year, a car salesman in Houston was kidnapped while taking a prospective client on a test-drive. The gory details include being beaten and thrown in the trunk of the car. Only through remarkable good fortune did he get away with only bruises.
If preliminary estimates hold steady, the amount of fraud victims and the total amount lost to fraud in 2015 is virtually indistinguishable to the amount of fraud victims and the total amount lost to fraud in 2014. While it’s good to know that the rate of and the amount lost to fraud has not increased, it is actually quite worrisome that fraud figures have not decreased from 2014 to 2015.
It was last year that I heard a prominent loss prevention professional - a name that many in the industry would instantly recognize as a keynote speaker at conferences and seminars - say to me: "You can't expect your cashiers to be able to prevent fraud from occuring in your stores." Or something along those lines. The conversation occured at the FraudFighter booth at the NRF Loss Prevention show in June of last year, so I may not remember the exact words he used. But the general gist of the comment was the same.
If you’ve been paying attention to the news, you’ve probably noticed something: the rapid rise of data breaches. As the world becomes more and more interconnected and technology-dependent, more and more data is being stored online rather than the traditional method of filing away all the data on paper in file cabinets. While having an online database can exponentially streamline processes and therefore save businesses time and money, it can also open up businesses to security breaches by virtually anyone from anywhere in the world.
Before EMV became the standard in the United States, data thieves set their sights on payment card information: credit/debit card numbers along with the account owner’s name and billing address. However, thanks to the beefed-up security protocols provided by the EMV standard, thieves are finding it harder to create fraudulent payment cards that work and are now going after the data needed to create fraudulent payment cards and other financial channels, such as mortgage loans.
While it’s a bit of a relief that actual payment card numbers seem to be safer than in the past, the landscape of data theft is much more treacherous – the thieves are now targeting data that can compromise your entire identity. Now, if your any of your data gets stolen in a data breach, you can’t resolve the issue by simply canceling whichever payment card was compromised since thieves can open new payment cards in your name. Now, you have to monitor your credit report for years after the breach and spend a great deal of your time reclaiming your identity in the event it is used fraudulently in any way.
The following is a list of the ten biggest data breaches in 2015. It is worth noting that these may not actually be the biggest breaches since organizations who have suffered data breaches often do not disclose how many records were affected; the list is composed of organizations who have released the amount of records that were affected.