Electronic Transaction Use & Risk of Identity Theft

Why Consumers Don’t Access Bank Accounts Online Earlier you indicated that you do not access your bank accounts online. Which of the following describes why you have not done so? Source: Javelin Strategy & Research (5/03), n = 2,877 (those who do not access account online) Percentage of Those Who Do Not Access Account Online

The Reality There IS a lot of fraud on the Internet Fraudsters and Security experts have been playing cat- and-mouse for years –Fraudsters and Prevention experts must constantly out- innovate one other –Government and industry-coalition actions are ineffective. Who will lead? Who can you trust? Consumers are unable to determine which actions will decrease their personal risk. Therefore, despite benefits and incentives, they resist change.

Identity Theft Costs Average to businesses: $4,800 Average to individuals: $500 (out of pocket) Average time to individuals: 30 hours per case With any serious personal injury, time spent worrying greatly outweighs time spent in affliction or recovery. –Example: lightning strikes and shark bites affect few, but the fear is nearly universal Data Source: FTC Identity Theft Survey Report, 9/03

New Account Fraud: Less Prevalent, More Costly New Accounts & Other Frauds All ID Theft Victims in the Last Year Percentage of Population1.5%4.6% Number of Persons3.23 million9.91 million Loss to Businesses, Including Financial Institutions Average per Victim$10,200$4,800 Total$32.9 billion$47.6 billion Loss to Victims Average per Victim$1,180$500 Total$3.8 billion$5 billion Hours Victim Spent Resolving Problem Average per Victim60 hours30 hours Total194 million hours297 million hours Source: FTC Identity Theft Survey Report, 9/03

New Accounts Opened by Identity Thieves Source: FTC Identity Theft Survey Report, 9/03 4E Percentage of New Accounts Opened by Identity Thieves

Existing Account Fraud: More Prevalent, Less Costly Misuse of Existing Accounts All ID Theft Victims in the Last Year Percentage of PopulationCredit card: 2.4% Non-credit card: 0.7% 4.6% Number of Persons6.68 million9.91 million Loss to Businesses, Including Financial Institutions Average per Victim$2,100$4,800 Total$14 billion$47.6 billion Loss to Victims Average per Victim$160$500 Total$1.1 billion$5 billion Hours Victim Spent Resolving Problem Average per Victim15 hours30 hours Total100 million hours297 million hours Source: FTC Identity Theft Survey Report, 9/03

How Victims Discovered ID Theft Source: FTC Identity Theft Survey Report, 9/03 Detection Is Greatly Improved Here -Javelin Despite sophisticated fraud detection systems, most identity theft is discovered by the victim, when they view an mailed paper statement!

Education is Needed FACT-based consumer awareness: –Fraud occurs in every channel –Paper should not be equated with safety –Just because fraud occurs online, doesn’t mean it was caused online –Even offline consumers can be a victim of “online” fraud Much online fraud starts (or is prevented) offline. –Consumer tips should include online recommendations –Online statement viewing, bill payment, and banking can reduce overall risk of identity fraud by over 10% Current available US economic benefit is $4.86B With greater industry participation, this figure will rise