| Online banking: A better security
bet? |
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Age plays a factor in who banks online.
For consumers aged 25-34, 65 percent do their banking
online. Compare that to only 34 percent of consumers 65 and older.
"I believe that older generations are so accustomed
to traditional banking that they are reluctant to try something
relatively new," says Cundiff. "Also, because some older
people are not familiar with the Internet and might find it overwhelming,
they tend to stick with what they know and trust."
Cundiff says that enhanced awareness campaigns about
online banking, as well as Web sites specifically set up for seniors,
are being offered by several banks.
The Javelin study shows that victims are more likely
to discover ID theft through self-detection than through general
notification by companies, debt collectors or the decline of credit.
On average, consumers who bank online discover ID
theft or fraud faster than those who rely on paper statements to
view their accounts. The average online banker will view his or
her accounts twice a month or more, compared to offline bankers
who view their paper statement an average of once every 30 days.
According to the latest findings by the Federal
Trade Commission released on Jan. 26, 2006, Internet-related
complaints accounted for 46 percent of all reported fraud complaints.
Credit cards and money orders accounted for most of the Internet-related
fraud complaints. Over 680,000 identity theft and fraud complaints
were received by the FTC in 2005.
The FTC estimates that identity theft affects nearly
5 percent of Americans, costing businesses and individuals a combined
$53 billion annually.
"We certainly say, that despite online safety,
consumers need to update their security tools because fraud on the
Internet is alive and well," says Cundiff. "Just as traditional
fraud and robbery has evolved over time, the same thing will happen
online. Banks will have to evolve to keep the ever-present criminal
out of their info."
Federal financial regulators are requiring banks that
offer online monetary-based transactions to tighten online access
by the end of 2006. The Federal Financial Institutions Examination
Council, along with five other banking regulators, issued guidelines
in October 2005 detailing the security requirements in a 14-page
report.
The report notes that current single-step authentication
is inadequate for high-risk transactions involving access to customer
information or the movement of funds to other parties. Regulators
say that a two-step authentication system should be the standard.
David Barr, an Federal Deposit Insurance Corp. spokesman,
says that while the council offers the guidelines, it does not endorse
any particular technology. Rather, the banks complete a risk assessment.
Based on that assessment, they may or may not have to beef up security.
The risk assessment will look at what type of information can be
accessed online.
Barr says, "Banks can choose from a variety of
security methods that provide two-factor authentication processes
that verify customer identities. A two-step authentication process
basically consists of combining a standard password with some other
identity test that is harder to steal or fake."
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