TowerGroup Study Finds ID Theft also Strikes Financial Institutions

NEEDHAM, Mass. – A TowerGroup study finds that identity theft while hard on members, is equally tough on financial institutions. According to the study titled Identify Theft: Lenders Are Victims, Too, U.S. lender losses due to identity theft total more than $1 billion annually. “Lenders have always been willing to accept a certain amount of risk,” said Christine Pratt, research author/senior analyst in the TowerGroup Consumer Credit division. “Fraud losses, if they’re not actively rising, have been an area of complacency. Periodically, though, it’s critical that lenders revisit their assumptions on the fraud issue – and given the current potential economic and geopolitical impact on their bottom line, now is the time.” According to Pratt, 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 addition, financial services institutions are advised to take a strategic, enterprise-wide approach to implementing technology solutions to deal with fraud, and identity theft in particular. “Ultimately, the emergence of an industry initiative or consortium that could link key information databases, perhaps in partnership with one or all of the U.S. credit bureaus, could produce the greatest payback for the lending community,” said Pratt.