Even with education and high-tech systems designed to protect consumers, identity theft continues to be a major concern. As this and other types of fraud proliferate, financial services companies are in danger of losing customers’ confidence in the event of a security breach. The Fair and Accurate Transaction Act (FACTA) Red Flag rules—designed to address these issues, require financial institutions and creditors to implement a written identity theft prevention program to detect, prevent and mitigate identity theft.
Customer trust is a valuable asset that every organization works hard to build and safeguard. However, as identity theft, phishing scams and security breaches continue to proliferate, companies—especially those in the financial services industry—run the risk of damaging hard-won customer confidence and the bottom line. According to a 2007 study by Javelin Strategy and Research, an estimated 150 million U.S. consumers won’t bank online due to concerns like identity theft.
The August 2008 arrests of 11 alleged hackers accused of stealing more than 40 million credit and debit card numbers highlight what those in the intelligence community have known for years—there is a mature multi-billion-dollar industry created by identity thieves. In fact, in 2008, it’s estimated that more than 8 million U.S. adults will be victims of identity fraud.
To help mitigate the costly effects of identity theft, FACTA was introduced in 2003. In addition to addressing consumer identity theft risks, it was created to ensure fair and accurate credit reporting by consumer reporting agencies, users of consumer reports and furnishers of information to consumer reporting agencies. To further strengthen FACTA, the Federal Trade Commission and various federal financial agencies added what are known as the Red Flag regulations, which require certain creditors and financial institutions to implement identity theft prevention programs.
Thankfully, there’s no need for panic. Today, there are automated, end-to-end fraud prevention and protection solutions available to help companies ease the transition to compliance. These range from credit and debit card fraud protection to strategic customer data management solutions that can help organizations reduce the risk of lost customer trust, stiff penalties and the potentially crippling effects of a serious security breach.
This paper explores the threats of identity theft, the facts and challenges of FACTA compliance and best practices in reducing identity fraud. It also identifies solutions that will automate compliance procedures today and better prepare organizations for tomorrow. In short, this paper will help companies gain a deeper understanding of identity theft and how they can use compliance measures to strengthen customer trust.