Expect Fraud Against Mobile
Smartphones and social media are still relatively new frontiers for consumer banking, and they pose new risks.
Younger consumers, more confident about posting personal details and among the heaviest smartphone users, are particularly at risk.
While the incidence of identity theft is increasing, cost to consumers has stayed about steady, according to Javelin Strategy & Research's 2012 identity fraud report.
Two things that have helped mobile users stop fraud earlier are more frequent online account monitoring and alerts sent to mobile phone.
But Javelinís research shows that social media users need stronger security education:
Nearly 70% of consumers with public profiles posted birthdays with months and years;
All of this information could be exploited by fraudsters.
"When we dug deeper, we found that people are over-sharing specific bits of personal information," Jim Van Dyke, president and founder of Javelin, tells American Banker.
The most active social media and smartphone users, 18 to 24 year olds, take about twice as long to detect fraud as other groups. That may be related to their having a false sense of security around social media and electronic channels, says Van Dyke.
Fraud likely to ramp up
Nearly 90% of bank risk executives believe mobile banking will create the next big wave of financial services fraud, says Julie Conroy McNelley, a senior analyst at Aite Group. McNelley surveyed 24 financial institutions in November 2011.
In particular, younger users don't distinguish between the lax security on Facebook and their financial accounts.
"This group is much more tied to smartphones, and they have an expectation of immediacy with their services, and financial services institutions are innovating and trying to come up with solutions that react to this," McNelley says.
Slightly more than a third of smartphone owners use a security password to protect their phones, according to Javelin's study. One-third store login credentials on their devices and 16% had installed software that could remotely wipe data in their phones.
Fortunately, nearly of phone owners 70% update their operating systems when updates become available, and these updates commonly include security fixes.
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