New Wave of Hack Attacks Threatens Consumers; Javelin Crowns Top Card Issuers in Identity Fraud Prevention, Detection and Resolution™

Jun 28, 2011

New Wave of Hack Attacks Threatens Consumers; Javelin Crowns Top Card Issuers in Identity Fraud Prevention, Detection and Resolution™


Javelin’s Seventh Annual Card Issuer’s Safety Scorecard Shows How Top Card Issuers Measure Up in the Hot Seat of Protecting Consumers while Empowering them to Actively Participate in the fight against Identity Theft.

San Francisco, CA, June 28, 2011
– Javelin Strategy & Research today released its Seventh Annual Card Issuer’s Safety Scorecard, which rates the top 23 card issuers against a benchmark of Javelin’s Prevention, Detection and Resolution™ fraud model. According to Javelin, opening credit card accounts is the number one most common new account fraud, but only one of eight issuers evaluated offer alerts for new account setup. As a result, the report delves into the ways in which card issuers should provide a broader range of detection alerts, ultimately enabling consumers to customize their own protection to suit their individual needs.

This report also identifies several revenue opportunities for issuers in addition to pointing out opportunities for fraud reduction.  Areas examined include UDLAPS™ (User Defined Limits & Prohibitions), two-way actionable alerts, consumer education and fee protective services all of which fight risky transactions.

Bank of America finished “Best in Class” for the fifth consecutive year followed by (in order of ranking) Discover, U.S. Bank, USAA and Capital One.  Javelin weights issuers’ prevention capabilities the most heavily acknowledging that this is the most difficult to achieve but the most important for both consumer protection of ultimate fraud prevention and loss.

Javelin added more stringent criteria this year and put more focus on addressing the use of a truncated Social Security Number (SSN). Javelin also added eight new criteria to the prevention category. “Breaches of consumer information from card issuers continue to make headlines and are driving issuers to rethink their current security strategies,” said James Van Dyke, President and Founder of Javelin Strategy & Research. “Security and fraud detection are the consumer’s top concern when selecting and staying with a credit card issuer. Banks need to work hand in hand with their customers to stay ahead of identity threats and implement the right security measures to best protect sensitive cardholder data.”

The report highlights the latest criminal trends and security strategies that issuers can adopt to combat current fraud tactics and discusses the successes of issuers in safeguarding their customers and improvements they can make to minimize fraud loss and increase customer satisfaction. Against a backdrop of data showing the majority of consumers view personal security as a responsibility to be shared with their bank, the report highlights innovative methods to win the war against the $37B of identity fraud that occurred in 2010.

Key Report Findings

  • 1 in 4 issuers are offering two-way actionable alerts and almost 3 in 4 offer alerts to mobile devices indicating an industry movement towards leveraging mobile platforms.
  • While overall prevention scores declined year over year, issuers continue to excel at resolving fraud (after the fact), meeting almost 90% of the criteria scored.
  • An effective means of ensuring consumers take the proper precautions when conducting financial transactions online, issuers should consider requiring a minimum amount of security software in order to access the full gamut of online financial activity.

“A new wave of hacker attacks threatens the current security model, resulting in a call to action for issuers to take a strong look at the processes in place for detection and prevention of fraud,” said Javelin’s Philip Blank, Managing Director, Security, Risk and Fraud. “We have found that prevention features offer the highest return on investment, leading issuers to see that it is imperative to prioritize educating consumers on the current technologies needed for protection.  We all know that the threat landscape is not going to change; however, the way that issuers and consumers respond to those threats will.”

About Javelin Strategy & Research

Javelin Strategy & Research is the leading provider of quantitative and qualitative research focused on the global financial services industry. Our extensive quantitative data and deep analyst experience enable us to forecast the direction of the financial services market and make recommendations that empower you and your business to succeed.

Contact

For more information about this or other Javelin reports, please contact Crystal Mendoza at (925) 225-9100 ext. 35 or cmendoza@javelinstrategy.com or visit www.javelinstrategy.com/research.

To arrange an interview with a research analyst and/or view available research (available to qualified members of the media), please contact Crystal Mendoza at (925) 225-9100 ext. 35 or cmendoza@javelinstrategy.com.