HowIDENTITY THEFT PROTECTION adds value that credit monitoring can’tO F F E R I N G T H E R I G H T S O LU T I O N I S THE KEY TO BUILDING CUSTOMER TRUST

by Kenneth Olan

© 2014 Kenneth Olan. All Rights Reserved. Commissioned By LifeLock.

Executive SummaryStatistics show that right now, somebody with illicit intentions is probably stealing someone else’s personal information. …perhaps from one of your customers.

Every financial services provider (FSP) at one time or another deals with the challenge of helping customers overcome the detrimental effects of personal identity theft, and sometimes FSPs even become the prey to it.

According to Forrester Research, every second someone is a victim of identity theft. That means three incidents have already occurred since you started reading this paper.

A 2013 Forrester Research identity theft tracking study found that 6.2% of US adults – 28 million – were victims of identity theft in the past 12 months. That’s more than the total number of residents in the state of New York, and almost as many as the entire state of Texas.

Given the magnitude of the problem, what can forward-thinking FSPs do to help protect their customers from such risk?

“ According to Forrester Research, every second someone is a victim of identity theft.2”

Pragmatic FSPs have always offered diverse ways to help their customers manage risk (e.g., safe deposit boxes, rewards programs, automatic bill pay-ments, etc.). This might explain why more and more FSPs are now advancing various products intended to counter the growing identity theft threat. After all, maintaining the security of its customers is inherent to every financial institution’s DNA.

1 “Identity Theft Tracking Study,” a commissioned survey conducted by Forrester Consulting on behalf of LifeLock. April/May 2014.

2 Ibid

Kenneth Olan is President and CEO of CAKE Performance Solutions. CAKE is a professional services company based in Houston, Texas that specializes in creating new forms of enterprise value for financial services organizations including building richer, more sustainable stakeholder engagement. Kenneth has over twenty-five years of experience in bank marketing, sales leadership and operational strategies. He started his financial services career at Citibank in 1986. For fourteen years prior to founding CAKE, Kenneth was the senior retail banking executive and chief marketing officer for two prominent, Texas-based regional banks; Amegy and First Victoria.

■ Emails may be addressed to: ken.olan@gmail.com

The Product Challenge Knowing exactly what specific product or service to offer to solve a particular consumer issue isn’t always clear. Today, more than ever before, every FSP faces the challenges of sorting through an increasing onslaught of information provided by vendors, the internet and the media to ferret out the facts, and find the best possible products and services for their customers.

CEO, CMO, CFO or COO – if you are a C-level executive, you know it all comes down to this – your customers will appreciate you to the degree you provide them with the results they actually want, and your brand depends on getting it right.

In the case of helping safeguard their personal information, the bar for what is expected from financial institutions is already set pretty high. Forms of protection, particularly those related to financial matters, are simply expected. That expectation means your organization could capitalize on a richly relevant product as a natural extension of your existing offerings.

The Starting PointIf helping find relevant solutions for your custom-ers is part of your organization’s mission, and you embrace the idea that helping customers protect their identity is a natural extension of the business, there is one fundamental question your product team must consider – which is better for your customers: a quality identity theft protection product or a traditional credit monitoring service?

While both forms of protection serve a purpose, they offer vastly different features and unique levels of performance. Thus, the right product depends on the outcome you want, and even more importantly on the outcome your customers expect you to provide.

Sorting It Out Identity theft is defined as the illegal use of someone else's personal identifying information (such as a Social Security number) in order to get money or credit, and all indicators suggest the problem is growing*.

Why is that?Elements of one’s personal identity are now captured everywhere in digital records including medical, government, employer, school, financial services providers including banks, credit unions, insurance companies and brokerage firms, and more.

An April 14, 2013 USA Today article entitled “Identity Theft Growing, Costly to Victims,” it was noted that identity theft “is expected to surpass traditional theft as the leading form of property crime.” But unlike property crime where a missing item is usually the extent of the damage, stolen personal information can be used over and over.

Confidently Securing Private InformationIdentity theft was the number one consumer -related crime reported by the FTC in 20133.

If you are considering offering consumers a product intended to help them reduce their risk of identity theft, it’s important to understand the fundamental differences in efficacy between identity theft protection and credit monitoring; differences in purpose and differences in the level of protection they provide. The two are often confused with one another, but they are not alike.

“ It’s important to understand the fundamental differences in efficacy between identity theft protection and credit monitoring… they are not alike.”

3 FTC Consumer Sentinel Network Identity Theft Complaints, January 1 – December 31, 2013

Trusted Advisors Offer Superior Products Offering the right solution is particularly vital in today’s social media-driven world which can be unforgiving if customers feel they are being sold something that is unnecessary, or that won’t fully meet their needs. Product relevance is central to customer satisfaction and is at the core of being considered a trusted advisor.

By understanding each customer’s individual needs, and by having a thorough knowledge of the distinctions between identity theft protection and credit monitoring, financial services providers can make the ideal recommendation and more cogently enhance their image as a trusted source of advice.

Digital Acceleration – Making It Work For YouWith cyber crime and systems breaches regularly making the headlines, one rapidly growing opportunity to serve customers involves offering services that help them more effectively manage the growing risks associated with a digital bonanza – one rife with personal data and information.

It is worth noting that, while digital technology has substantially increased the risks associated with protecting one’s identity, the same digital technology has simultaneously enhanced the capabilities to protect consumers from the related risks through carefully engineered products that can sort through immense amounts of data very quickly.

“ Offering the right solution is particularly vital in today’s social media-driven world.”

Identity theft protection and credit monitoring services allow financial services providers to expand their non-interest income generating menu of personal security solutions, but offering the proper product can mean the critical difference between real protection and the mere perception of it.

Identity Theft is Not Just a Digital IssueWhile personal data can unknowingly be exposed through digital vehicles such as public WiFi, social media, skimming devices, retailer breaches and other methods of criminal exploitation, low-tech means of stealing one’s identity are still a factor perfectly welcomed by would-be identity thieves.

“ Making sure the proper product is offered can make the critical difference between real protection and the mere perception of it.”

Lost wallets, dumpster diving, mail box breaches, and change of address forms are a few examples of low-hanging fruit for aspiring identity thieves. When printed, ‘analog’ information is combined with new digital tools, it can be used to access even more private data. As a result, the stakes have become exponentially higher, and a new generation of detection tools is required to address the problem.4

4 2014 Verizon Data Breach Investigations Report, p.9

To add to this complexity, the sheer amount of warehoused information that is stored on diverse systems worldwide is indeed growing.

According to EMC Corporation, a company specializing in data storage, the world’s information is doubling every two years and will multiply 10-fold between 2013 and 2020 – from 4.4 trillion gigabytes to 44 trillion gigabytes. Today, the average household creates enough data every year to fill 65 iPhones5. Simply put, more data, and more points of exposure, create more risk.

Once personal information lies within third-party systems, it is only protected to the degree the specific entity can defend it. Recent security breaches have demonstrated that such protection is far from perfect, even for the largest companies. Thus, it is increasingly important to have a robust, proactive form of protection in place to help safeguard the diverse universe of an individual’s private information in the event of a compromise.

Compromised digital information can move at the speed of light, so the prudent countermeasure is cutting-edge technology that can detect and notify consumers of potential problems with the same velocity. Only then can potential thieves be headed off at the pass.

Consumer SentimentConsumers are inherently concerned about the security of their personal information, and financial services organizations are uniquely positioned to step in and help increase their peace of mind and security while further building trust.

A good example of this consumer concern is reflected in a 2013 survey conducted by Forrester Research6 where respondents answered this question:

“ In general, how concerned are you about the companies you interact with accessing the following personal information?”

5 EMC 2014 Digital Universe Study

6 “Identity Theft Tracking Study,” a commissioned survey conducted by Forrester Consulting on behalf of LifeLock. April/May 2014.

NUMBER OF BREACHES PER THREAT ACTION CATEGORY OVER TIME

HACKING

SOCIAL

PHYSICAL

MISUSE

ERROR

MALWARE

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

800

600

400

200

As the chart shows, consumers aren’t only concerned with their credit information. They increasingly understand that there are many other forms of information that can be used by criminals to invade their privacy or assume their identity.

So what are the available solutions to help consumers reduce these risks?

“ Consumers are inherently concerned… and financial services organizations are uniquely positioned to step in and help.”

All Solutions Are Not Created EqualThe two risk management services most familiar to the public are identity theft protection and credit monitoring. As mentioned earlier, these services are often confused by consumers.

Understanding the fundamental differences between the two can help financial services providers, who seek to add real value to their product set, better assist customers in protecting their identities.

To further understand this contrast, let’s look at each type of service – credit monitoring and identity theft protection – and examine what each actually accomplishes.

PERCENTAGE OF CONSUMERS CONCERNED

80

70

60

50

40

30

20

10

0

Credit Monitoring In the most fundamental terms, if you simply want to keep an eye on your credit, credit monitoring has some value. The core idea for credit monitoring is to give users access to their credit information so they can review it for accuracy and address any anomalies they may notice.

Credit monitoring is an umbrella category that covers a relatively narrow spectrum of possible product features that differ by provider. In fact, there are dozens of companies offering various levels and types of credit-monitoring services.

Much of the core function of this kind of service is performed by one of the three major credit bureaus – Equifax, TransUnion and Experian. Other companies that market themselves as a “credit monitoring service” simply contract with the bureaus to extract and resell a defined portion of that information in order to provide their respective go-to-market offerings.

In reality, credit monitoring can be done by any individual who wants to take the time to do it. In fact, consumers have the right to request a free credit report from each of the three reporting agencies once per year.

While credit monitoring is an important element utilized in identity theft protection, it represents only a fraction of risk mitigation within a much broader array of potential factors that can lead to one’s identity being stolen. Credit monitoring, at its best, is a defensive measure which “flags” unusual activity related to one’s credit.

Credit monitoring companies offer services that range from bare minimum coverage to a few additional features like mediation and insurance. Some of the key differences include:

Information SourcesSome credit monitoring services pull their information from a single credit bureau which often won’t have all of a consumer’s credit information, while others may use two or three bureaus to extract information.

7 2013 Carnegie Mellon Child Identity Theft Study https://www.cylab.cmu.edu/files/pdfs/reports/2011/child-identity-theft.pdf

“ The core idea for credit monitoring is to give users access to their credit information so they can review it for accuracy.”

Frequency of Information Credit-monitoring services range from reporting daily to annually. Some provide information weekly, while others report two to three times a month, monthly, quarterly and semi annually.

Depth of InformationMany credit-monitoring services provide a basic level of information while others may provide more. In fact, some encourage the consumer to pay an additional fee to see more.

AssistanceSome credit monitoring services offer remediation assistance, or help in recovery if there is a problem detected, while others do not.

Limited ScopeA critical fact not to be overlooked is that children are targeted 51-times more than adults for identity theft, and the credit bureaus can’t do much to help those who are simply too young to have a credit profile.

In essence, credit monitoring is a highly focused function, with limited ability to do more than its core purpose.

Comprehensive Identity Theft ProtectionIn contrast to credit monitoring services, a quality identify theft protection solution can do far more to safeguard your personal information from being hijacked.

A solid identity theft solution includes credit monitoring, but that is only a fraction of the value. Even so, some identity theft protection companies don’t even pull credit reports, and like the credit monitoring companies, some only do so from a single bureau.

“ Children are targeted 51 times more than adults for identity theft.”

What Does Best-in-Class Identity Theft Protection Do?A powerful identity theft solution is vigilant at the forefront. In other words, it operates proactively, scouring far-reaching data sources to help protect you in advance, before you become a victim of identity theft. The best solutions provide near real-time insight into the risk of identity fraud and identity theft to safeguard personal information based on actual activity at the transactional level.

Less effective programs may only alert you after an identity theft or other related problem has occurred, and that notification is often delayed by days or even weeks.

Let’s face it. Consumers don’t want problems they need to fix. They’d rather avoid the problem ever occurring in the first place, and that’s where a quality identity theft protection product operates at its best. Superior identity theft protection programs provide constant protection through a rich menu of services that range from very simple to highly complex.

For example, some solutions will scan the web for uses of your name, social security number, telephone number, street address and bank account numbers – all information that can be pieced together to zero in on would-be victims.

Top providers also scour underground websites for your credit card numbers and other personal information, monitor your files at all three credit bureaus, and alert you if there's a change in your

information. Best in class solutions have access to proprietary sources that monitor millions of identity attributes and this improves their ability to deliver reliable visibility into an identity.

Some services even go so far as to scan public records, sex offender registries, file sharing networks and criminal record data bases to look for items that may potentially put their customers at risk.

“ Consumers don’t want problems they need to fix. They’d rather avoid the problem ever occur-ring in the first place.”

The best firms offer remediation specialists who are trained on federal legislation, national credit repository guidelines and consumer rights and will help you contact your financial institutions, and work with you to complete the necessary paperwork to get your life back in order.

Of course, the universe of available features is much broader than those just listed and varies from company to company. Therefore, it’s important to thoroughly review potential solutions to ensure you are selecting the best coverage for your customers.

ConclusionEach financial services provider ultimately needs to decide what level of identity theft protection to offer its customers, and there’s little question that the need to protect one’s personal information is taking on increasing importance to consumers, and financial services organizations, alike.

Those seeking to perpetrate identify theft are not going away. They are becoming increasingly resourceful in their efforts to steal personal information for their illicit advantage.

While credit monitoring offers a limited amount of useful functionality, it is not the go-to solution savvy FSPs will use to bolster consumer confidence and earn the moniker of trusted advisor. It simply can’t deliver the full package.

A comprehensive identity theft protection solution is the most aggressive and effective way to stop the bad guys before personal information is compromised and used for ill-gotten gains. Getting ahead of the crooks with an increasingly wide net of protection is the key to successfully thwarting their efforts in the future.

by Kenneth Olan