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Survey IDs ACH and wire fraud as growing threats

August 16, 2013 by Terry Dooley — SVP & CIO, ITS, Inc

The Information Security Media Grouprecently announced the results of its 2013 "Faces of Fraud" study. The study focused on the most common fraud schemes: fraudulent use of payment cards and checks; phishing; account takeovers; and wire fraud.

The survey also focused on the detection and prevention of insider crimes and how institutions are participating in information-sharing initiatives.

The survey found that payment card fraud, phishing attacks, and check fraud are the top three fraud threats financial institutions currently face. Results also indicate ACH and wire fraud is on the rise, despite amped-up security efforts. FIs are investing more aggressively in anti-fraud technologies and solutions, including, enhanced customer education, fraud detection and monitoring, IP reputation-based tools, and dual-customer authorization. Despite these increased efforts, ACH and wire fraud continue to plague FIs.

FIs are continuing to allocate significant resources to controls for increased online security, but 46 percent of respondents have yet to see a decrease in account takeover losses. Forty-three percent say security controls have not reduced overall fraud losses.

Also noted in the survey, FIs are continuing to push consumer education, but have, unfortunately, seen little impact on fraud losses. Interestingly, 65 percent of respondents admit to becoming aware of fraud incidents through customers notifying them.

Survey respondents reported that some of their customers are unwilling to accept additional security features. In fact, 65 percent of FIs participating in the survey indicated they’ve experienced customer resistance to implemented security controls.

Some of this resistance stems from customers not wanting to be hampered by dual-controls and tokens.

Merchant breaches are also a growing problem for card issuers. Over the past year, card-related fraud occurred most often as a result of merchant breaches and compromised card-not-present transactions.

Additionally, one of the oldest fraud schemes out there is still leaving its mark. According to the survey, low-tech check fraud continues to result in significant losses.

Although dual-authorization creates additional work and expense in today’s environment, all FIs need to use and stress the necessity of layered security. It needs to be made clear to customers that layered security is no longer optional.

Getting customers to understand the importance of additional layers of security is a great first step on the road to decreased fraud incidents at your FI. That said, even though customers must play a role in security, relying too much on customer education is a mistake.

A layered prevention strategy, consumer education, and proactive payment monitoring, are all equally necessary in order to defeat this ongoing threat.

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