Javelin Strategy & Research: Bank Debit Cards Offering Zero-Liability

Javelin Strategy & Research issued a research report ranking top banks and credit unions on 50 identity fraud Prevention, Detection and Resolution capabilities.

The report scores how well an individual financial institution teams up with customers against criminals that committed $48B in identity crimes last year. Finishing first overall among 25 large US institutions was Bank of America, followed closely by Regions Bank and Wells Fargo. Javelin's latest report finds that banks made strides in prevention of identity fraud, with detection capabilities showing little improvement.

"In a recession facing more identity fraud and an entire reshuffling of top banking providers, substantial improvements occurred in how banks work with customers to prevent identity crimes," said James Van Dyke, President and Founder. "Consumers don't just want to be protected by others; they want involvement in protecting their money and identity. Inventive criminals continually update their methods, and banks must do the same."

Javelin's 2009 Banking Identity Safety Scorecard uses website research and mystery-shopping methods to score the largest banks and credit unions that represent half of all U.S. consumer checking accounts. The 50 precise security measures are based on exacting analysis of three areas: consumer behavioral research, review of changing crime patterns, and new technologies available to banks and consumers. This year's scorecard includes such areas as transaction-specific alerts via mobile devices, prohibitions over unauthorized online or overseas transactions, SMS text and e-mail notifications of suspicious activity, multi-factor authentication, zero-liability guarantees for most online and card purchases, and having a team specializing in identity theft resolution. Identity Fraud carried an average per-victim toll of $496 in out-of-pocket costs and 30 hours of personal resolution hours in 2008.

Key Findings of 2009 Banking Identity Safety Scorecard:

- Banks strengthened prevention capabilities, scoring an average of 27 percentage points higher than last year. Bank of America, BB&T and Fifth Third had the highest prevention scores.

- Financial institutions finally curtailed the use of full social security numbers for routine authentication. (Consumers: never divulge your full SSN unless absolutely necessary, and then only after the other parties' identity is confirmed).

- Nearly nine in 10 banks now equip their customers with third-party security vendors for online safety, teaming up with companies such as McAfee and Symantec to ensure that they are better protected when banking online.

- Banks are strengthening education, with 100 percent of the top financial institutions now offering anti-phishing email education online - doubling from the previous year. Because consumers receive confusing and contradictory self-protection advice, banks have become trusted safety advisors.

- Highest identity fraud detection scores were posted by Regions Bank, Bank of America and Citibank.

- Detection capabilities showed meager improvement overall. Javelin calls for 18 alerts and notifications regarding changes to consumers' accounts and personal information. Consumers typically are the first to spot fraud in half of all ID crimes, and with mobile technologies promising new capabilities, banks should take advantage of opportunities to further improve identity safety.

- ING, Navy Federal Credit Union, PNC Bank and Wells Fargo earned perfect scores in 11 identity fraud resolution criteria.

- 100 percent of top banks now offer zero-liability protection and next-day replacement of lost or stolen debit cards for most routine purchases, tightening parity with credit cards.

"Our 2009 scorecard shows that 100 percent of leading banks surveyed have extended zero-liability fraud guarantees for debit cards to cover PIN, signature and card-not-present purchases. Entering the holiday shopping period, customers of these institutions can have increased confidence that their debit card purchases will be fully protected from fraud," said Mary Monahan, Managing Partner and Research Director. "As financial institutions continue to battle identity fraud criminals, institutions will gain an edge by partnering with their customers to more quickly and accurately block fraud."

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