Identity theft banking losses are at historic levels.

Identity theft is when a thief is fraudulently obtaining and/or using another individual's personal identifying information like their date of birth, social security number or bank account number to commit a financial crime.

Crimes might include cashing fake checks, obtaining mortgage loans or applying for credit cards.

'Pretext calling' is another way to commit identity theft by fraudulently obtaining customer information from a bank or other merchant.

In this scenario, a thief posing as a bank customer or a person authorized to have the customer's information, calls a bank. Deceitfully, he convinces some bank employee to disclose customer-identifying information and uses it fraudulently.

Identity theft banking losses has become a scourge plaguing the banking industry to a very great extent.

The Division of Banking Supervision and Regulation of the Board Of Federal Reserve, with reference to section 525 of the Gramm Leach Bliley Act (15 US Code 6825), had sent a circular (SR 01(Sup) dated April 26, 2001) to all domestic and foreign banking organizations under it's supervision.

This circular/letter contains guidelines on how to protect customer information and complete SARs (Suspicious Activity Reports) used for reporting incidents related to identity theft and pretext calling.

The letter suggests a number of steps, which banks can take in order to safeguard all their customer's information and prevent identity theft banking losses.

The letter suggests a broad three-fold action plan.

1. To establish procedures for verifying the identity of individuals who apply for financial products
2. To establish procedures for the prevention of fraudulent activities that can lead to customer information disclosure
3. To maintain a security program for protecting customer information.

Verification Process: - Procedures that include steps for verifying the veracity and accuracy of information in applications for new accounts should be established. This can be done in the following manner.

• Independent sources can be used to confirm the information furnished by the customer. A phone call can be made to the customer to confirm if he has applied for/opened a credit card or checking account.
• The employer mentioned on the application can be contacted to confirm information provided in the application.
• It should be verified whether the telephone area code and zip code are from the same geographical area.

Prevention of Fraud: - As soon as a request for new checks/credit cards is received, along with an address change request, the customer should be contacted immediately for verification of information.

Communication confirming the address change should be sent to both the earlier and the changed address.

In case of opening new accounts, it should be checked if the information given on the application has any connection with some previous fraudulent activity.

For example, many organizations rely on the credit report for approving a new account. If there is a fraud alert found on the report, the application should be flagged. Further action should ensue only after the customer has been contacted.

Information security safeguard: The Interagency Guidelines Establishing Standards for Safeguarding Customer Information was issued in 2001 by the Board Of Federal Reserve and other federal banking agencies.

Under these guidelines, banking organizations are obliged to implement and maintain an extensive information security program. Appropriate and adequate technical, physical and administrative measures need to be established to safeguard customer information.

All of the above policies and procedures have been put into place in order for banks to protect their assets and to protect the personal information of their customers. Identity theft banking losses have decreased since these policies have been adopted.

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