Why would using online banking decrease a person's susceptibility to identity fraud?

There are two major ways in which online banking can help prevent identity theft:

1. Online banking results in a drastic reduction of the amount of
paper records, which are much easier to steal than electronic records.

2. Users of online banking typically check their account information
much more frequently than do users of offline banking services, and
are thus able to give a more rapid response to unusual or unauthorized
activity.

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"Customers can monitor their accounts more frequently and notice any discrepancies.

'Online banking offers the opportunity for consumers to regularly look
at their financial information and make sure that everything is
correct,' said Gary Hudson, community banking district manager at
Wells Fargo. 'We believe it'll lower their possibility of becoming
victims of identity theft.'

Another advantage is that consumers don't have to receive their
statements in the mail and risk having them stolen."

Contra Costa Times
http://www.contracostatimes.com/mld/cctimes/business/7495005.htm

"A consumer stands a greater chance of getting hit by lightning than
becoming a victim of fraud or identity theft when they use electronic
bill payment and account services, according to new study... Viewing
and paying bills and statements online eliminates the most common
means of identity theft. Information is more easily obtained in the
physical world than via secure Web sites.

Identity thieves are not unlike burglars or other personal property
thieves in their methods of operation. They want an easy mark. It
requires much more sophistication to break into online systems
protected by encryption software than to snatch a piece of paper from
mailboxes, trash bins or your desktop."

Realty Times: Online Banking Stifles Identity Theft
http://realtytimes.com/rtcpages/20031009_theft.htm

"First, 14 percent of all new bank account cases resulting in fraud
are traced to theft of paper from in front of victims' homes. Second,
5 percent of all identity theft could be reduced if paper billing were
eliminated... paper billing creates a cost of $2.37 billion...

Consumers who view online accounts and pay bills online are nearly
four times more likely to actively monitor their vendor activity than
those who wait for paper bills and monthly statements. That
consumer-level watchfulness can be more effective in protecting
against account fraud and identity theft than the millions of dollars
businesses spend on fraud-monitoring technology."

Tech News World: Identity Theft Online: Debunking the Myths 
http://www.technewsworld.com/perl/story/32622.html

"James Van Dyke, founder and principal analyst of Javelin Strategy and
Research, a Silicon Valley-based consultant for financial services
companies, has recently released a report that quantifies the benefits
to banks of online account management. Its findings in the area of
identity theft and related fraud are especially noteworthy. Van
Dyke... calculates that approximately 10 percent of the $50 billion
annual cost that identity theft inflicts on the industry could be
avoided if consumers adopted online account management and electronic
statements. Among his conclusions are these attention-grabbing
estimates:

Earlier detection of identity theft and account takeover via online
account management and email alerts would save the industry $2.5
billion.

The reduction in stolen paper statements brought about by replacing
them with electronic statements would save another $2.4 billion."

Identity Theft 911: Online Banking and Identity Theft
http://www.identitytheft911.com/education/article/idtheft_20031211_onlinebank.jsp

"Personal information can be more easily obtained in the physical
world than via secure sites such as a bank's Web site... This
significantly reduces the risk of having fraud committed with new
accounts that are opened in a consumer's name - which costs an average
victim more than 60 hours of personal time to correct and more than
$1,100 in out of pocket costs. The benefits to businesses are even
greater. The average cost associated with fraudulent accounts is more
than $10,000 per case and $32.9 billion annually.

Additionally, frequent account monitoring is the single greatest step
consumers can take to fight identity fraud... Consumers that view and
pay their bills and bank online are nearly four times more likely to
monitor their transactions frequently than those who wait for paper
bills and monthly statements. Despite the millions spent by business
on fraud monitoring technology, more than half of the cases are
identified by consumers. This earlier detection can reduce identity
theft by more than 18 percent, by detecting and reporting fraud before
more damage can be done."

Microbanker: EBPP May Reduce Identity Fraud
http://www.microbanker.com/artarchive02/031115EBPPMayReduce.html

"Javelin Strategy & Research has released 'Online Banking and Bill
Paying: New Protection from Identity Theft,' the first quantifiable
study of how Internet use can help protect consumers and reduce
identity theft."

Here you'll find the full text of the Javelin report mentioned above,
"Online Banking and Bill Paying: New Protection from Identity Theft":

Javelin Strategy
http://www.javelinstrategy.com/ID_Theft_Marketing_Piece.pdf

Google search strategy:

Google Web Search: "online banking" + "identity theft"
://www.google.com/search?hl=en&ie=UTF-8&oe=UTF-8&q=%22online+banking%22+%22identity+theft

I hope this information is useful. If anything is unclear, or if a
link doesn't work for you, please request clarification; I'll be glad
to offer further assistance before you rate my answer.

Best regards,
pinkfreud

That was a quick answer and I appreciate all of the information.

It's actually a two-edged sword: you have the opportunity to check
your accounts more regularly (as I do), rather than monthly (like most
folk) and you can also reduce paperwork (such as cheques) that are
susceptible to fraud.

However, you are potentially exposed to new risks, such as spoof mails
purporting to come from your on-line bank. One of my banks regularly
posts warnings against these which, apparently, look authentic.

Obviously, if you don't check your account more regularly than before
then you are missing out on a great opportunity to be more vigilant.

Me? I am very much in favour.

Thank you very much for the five-star rating and the generous tip!

~pinkfreud

Here's another warning ......
 
Fraudulent email alert 

We have been made aware that another fraudulent email alleging to be
from Lloyds TSB is in circulation from today. This email contains a
link that when accessed displays a screen asking customers to enter
their Internet banking User ID, Password and Memorable Information in
full.

These are not genuine emails. Lloyds TSB never send emails asking for
this information to be recorded in this way. If you receive such an
email, please do not respond and forward the message immediately to
Online@lloydstsb.co.uk. If you are concerned that you have received
this email and may have divulged your details or suspect that the
security of any of your Lloyds TSB accounts has been compromised
contact us immediately on 0845 3000 116 (+44 20 7649 9437 from
overseas).

24/03/2004    

Your Internet banking security 

At Lloyds TSB we understand that security is an important factor for
our customers to consider.
Your Password and piece of Memorable Information, along with your User
ID, provide you secure access to your accounts online, however there
are a number of simple steps you could take to further secure your
accounts:

- Choose alphanumeric 'strong' passwords and change them regularly;
avoid obvious passwords, such as names of family members or pets.

- Don't tell anyone else your Password and you should not write your
Password down. If you think someone knows your Password go online and
change it immediately.

- If you are using the Internet in a public place (e.g. a cybercafe)
do not leave the PC unattended, and ensure that no one is watching
what you type. Always log off from Internet banking upon completion of
your session. This will prevent the viewing of previous pages of your
online session via the PC.

For more help on using Internet banking safely go to www.lloydstsb.com/security.

24/03/2004