Are Banks Doing A Good Job Sniffing Out Credit Card Fraud?

Javelin Strategy and Research conducted a study called “Annual Issuers’ Safety Scorecard” concerning credit card fraud.   It is more difficult for banks to prevent scammers’ access to bank and credit card accounts but banks are getting better at detecting it. Credit card fraud has increased 87 percent since 2010, with a loss of $6 billion.

“The good news is that a combination of work that banks are doing and work that consumers are doing is causing people to detect these frauds quicker, so we’re not seeing an increase in dollar loss,” says Jim Van Dyke, Javelin’s president and founder. “With all these mobile devices and the online access to your bank account, there’s a lot of opportunity out there to stop criminals in their tracks,” Van Dyke says.

Top rankings

Javelin analyzed and ranked the top 23 card issuers in the U.S. for fraud prevention, detection and resolution. Here are the rankings:

Bank of America was ranked best overall for 2012 and was also best in prevention. They are doing a job with the authentication and the electronic alerts.

Capital One was named best in detection.

There was a four-way tie for best for resolving fraud problems: American Express, Bank of America, BB&T and Discover.

Reasons for fraud increase

Fraud is increasing because criminals are more sophisticated. They change their methods so fast you can’t keep up with them. In addition, consumers don’t protect themselves.  They don’t put anti-malware software on their computers or protect their mobile devices. Most don’t have a password on their mobile device.

What banks can do

Banks can use the latest technology to get ahead of the criminals. Authentication is one method, which uses technology and interaction with the customer to prove that it’s really you. They “fingerprint” your device to see if that’s the same computer logging in from the same place. If it isn’t, they ask some security questions. These questions are usually personal in nature. In the past they have been your mother’s maiden name, name of your pet, home town, etc. The questions should be customized by the individual and not information that could be available from Facebook or a genealogy site. Customers should be convinced to sign up for electronic alerts instead of paper statements.

Since the criminals quickly adapt to changes in methods used to detect fraud, you can never be too careful.  The banks are detecting fraud quicker but can’t prevent it. You need to protect yourself the best you can by installing anti-malware software, password protecting everything, and using passwords and authentication questions that are not public information.

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Monitoring, Identity Theft, Money & Identity

This post was written by John Ulzheimer