When Lightning Strikes

Help members weather the storm of security breaches.

September 15, 2014

Lightening Strikes RR

Lightning strikes are problematic for Mom and Dear Old Dad.

With predictable reliability, every time a storm rolls through, lightning strikes. Their telephone is blown off the wall in a visual display that rivals any fireworks exhibition.

Sparks fly. Smoke billows.

The airborne telecommunication device leaves in its wake an impressive sooty smudge on the wall, an acrid aroma, and aggravated residents whose quick reflexes keep them safe from debris—but not from yet another appearance at the local phone purveyor.

Consumers, too, are plagued with “lightning strikes” via security breaches through retailers and other outlets.

Quick reflexes are vital as both consumers and financial providers attempt to dodge unpleasant consequences of recurring fraudulent storms. How to lull the storm with lightning in the fraud forecast?

Enlightening research illuminates the frequency of fraud and sounds an alarm on consumer awareness.

‘Electricity, the peril the wind sings to in the wires on a gray day.’–Janet Frame, author

Research demonstrates days are gray indeed with prevalence of economic fraud.

One storm front is identity (ID) theft, named the fastest-growing crime in America by TransUnion.  About nineteen individuals each minute are impacted, and “One study found 32% of identity theft victims discovered a family member or relative was responsible for stealing their identity.”


Also, “Only 28% of identity theft cases involve credit or financial fraud. Phone, utility, banks, and employment fraud make up another 50% of cases.”

Therefore, consumers need to be aware of many storm fronts.

Further detailed statistics on scope of the ID theft problem are available at the Identity Theft Resource Center. Here, a breach is “defined as an event in which an individual’s name plus Social Security Number, … driver’s license number, medical record, or a financial record/credit/debit card is potentially put at risk.”

Interesting facts of note:

  • As of Sept. 9, 2014, 533 total breaches had been identified for this year, with 18,721,149 records exposed;
  • In the banking/credit/financial category, the number of records at risk is 172,320; and
  • Most breaches thus far have occurred in the business category, at 36.2% of events.

“Identity theft is much more common than you may think,” says a LowCards Consumer Study.  And, ID theft “has become a major concern for the American consumer and is now having a significant impact on their shopping habits.”

Thundering statistics on credit card theft:

  • 13.5 million cases of card ID theft over the past 12 months;
  • 51% of ID theft involves card theft;
  • 25% of consumers choose to use cash with greater frequency;
  • 28% reduce debit transactions; and
  • 94% are more or equally concerned about ID theft compared to last year.

“There were just over 13.7 million unauthorized credit card transactions in 2012 which had a total value of $2.3 billion in fraudulent charges,” says the recently released 2013 Federal Reserve Payments Study.  Further, there were 1.3 million unauthorized ATM cash withdrawals totaling $256.3 million.”

The average unauthorized withdrawal amount was $199.

“This is the first time the Fed study has addressed fraud related to payments,” notes “Bank Info Security” in its summarization of the Fed study findings: “What it confirms is that card fraud is banking institutions’ greatest pain point.”

‘The other guys just caught lightning in a bottle with a great game.’–Rick Pitino, basketball coach

Many consumers do not know how to protect themselves from fraud nor how to deal with ID theft when it occurs.

Surprisingly, some consumers will simply offer up personal information to those who call and ask. “Americans Lost $8.6 Billion to Phone Fraud in Last Year,” Today reports on Harris Poll findings.

Here, the average loss stood at $489, and 17.6 million Americans were victims of phone fraud.

Among the problems: banks and credit card companies are spoofed, phone bills have unauthorized charges, and 20% of consumers with smartphones do not do anything to protect themselves.

Fifteen percent of respondents of the PwC’s Employee Financial Wellness Survey say they have been a victim of identity theft.

Although more people here know what to do should their identity be stolen, many still lacked awareness.

Survey results presented by American Consumer Credit Counseling  corroborate on the problem of lack of consumer know-how in dealing with identity theft.

Here it’s reported that 52% percent of survey participants “have had their personal information compromised as a result of circumstances such as a lost or stolen credit/debit card, a security breach, or an identity theft scam.”

“Data breaches have become a national epidemic,” the article notes. “It is necessary that consumers know how to protect their personal information and what to do in the case” of data compromise.

This survey revealed “41% of respondents are not confident that they know how to protect themselves if their information has been compromised.”

Yet, consumers know risks exist. “When we look at how broad measures of concern among adults have changed over the past five years, we find that Internet users have become more worried about the amount of personal information available about them online,” notes Pew Research.

Indeed, 18% of adults in a survey have experienced theft of personal information like credit card data, bank account information, and Social Security Number.

Who’s a Better Fraud Investigator—You or Your Bank?” asks Payments Views.

The answer? It depends.

“Cardholders initially detected card fraud slightly more often than their issuers. But when a second instance of fraud was experienced by those same cardholders, it was the issuer that was the first to notice the bogus transaction.”

This would suggest consumers need to maintain vigilance, and not rely on providers to save the day.

Mom and Dad are on their third phone this summer. Lightning strikes can have expensive consequences.

So can fraud strikes. Consumers need to protect themselves.

As observed by Ralph Waldo Emerson, “The best lightning rod for your protection is your own spine.”

LORA BRAY is an information research analyst for CUNA’s economics and statistic’s department. Follow her on Twitter via @Bray_Lora, and visit the CUNA blog, “The Research Roundup: Economic Perspectives.”