US lenders losing $1 billion annually to ID crime

US lenders losing $1 billion annually to ID crime

Analyst TowerGroup conservatively estimates that US lender losses due to identity theft total more than $1 billion annually.

The research house takes its cue from Federal Trade Commission reports of 161,819 incidences of ID theft in the US in 2002.

TowerGroup says that with fraud levels rising it's time for banks to re-appraise their tolerance of the issue and look at the potential of new channels, technologies, and regulations to combat ID crime

Christine Pratt, a senior analyst in the TowerGroup consumer credit practice and author of the research, notes that emerging products using less costly Web services can be packaged with existing fraud or compliance tools to help make return on investment less elusive for lenders.

In particular, packages that leverage the credential review requirements of anti-terror and money laundering legislation are a logical first option for lenders to explore, she says.

However, the real breakthrough will come with information sharing using central centralised online databases.

"Financial services institutions should take a strategic, enterprise-wide approach to implementing technology solutions to deal with fraud, and identity theft in particular," she says. "Ultimately, the emergence of an industry initiative or consortium that could link key information databases, perhaps in partnership with one or all of the US credit bureaus, could produce the greatest payback for the lending community."

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