Identity-Safety Excellence Among Credit Card Issuers

The Scorecard ranks 23 leading credit card issuers on their online, identity fraud prevention, detection and resolution capabilities. Javelin reviewed card issuer Web sites and conducted mystery-shopper research to rate the credit card issuers in 30 categories ranging from account alerts to the prohibition of certain transactions. The results show that card issuers -- while scoring high in their fraud resolution offerings -- vary widely in the capabilities offered for fraud prevention and detection.

"All card issuers are working hard on safety issues on the customers' behalf, but only a few excel at the most effective strategy: working in partnership with the customer to increase their safety," said James Van Dyke, Founder and Principal Analyst for Javelin Strategies. "Both identity fraud safety and marketing-differentiation are paramount to successful card-issuance businesses. The data and analysis shows how card issuers are positioned to see these two issues converge. But we also found a significant difference between the abilities of the top-rated issuers and the bottom-rated issuers to protect consumers against identity fraud."

The following card issuers topped the survey list:

• Citibank
• American Express
• Bank of America
• Discover Bank
• FNB of Omaha
• HSBC
• JP Morgan Chase
• Wells Fargo Bank

Issuers are beginning to adopt specific safety capabilities such as user- defined restrictions on cash advances and account-balance limits as well as alerts on large transactions or changes to customer addresses. By deploying cardholder-facing, prevention and detection capabilities, and by giving cardholders the tools to better protect themselves against identity fraud, card issuers are differentiating themselves from competitive offerings, strengthening customer retention, and reducing operating costs.

The research also found that while consumers are being warned against disclosing Social Security numbers, almost half of all card issuers continue to use the full nine-digit number in their interaction with customers, whether by phone, Internet or mail. "This is a risky practice that unnecessarily increases the customer's exposure to identity fraud," said Rubina Johannes, Research Analyst and author of the report.

Even as consumers are urged to secure their sensitive documents -- in the mail, the garbage or inside the home -- the ability to shut-off paper statements and view them online is offered by a little more than one half of card-issuers surveyed. Statistics -- based on victims with knowledge of the criminal's method -- show that only 9 percent of information breaches leading to identity fraud are achieved through the Internet; yet this same study shows that Internet monitoring provides more rapid fraud detection. Thus issuers can view cardholder use of the Internet as a security advantage.

For a copy of the complete 2006 Card Issuers' Identity Safety Scorecard, or for information on the methodologies applied, key findings, and other Javelin reports, visit: www.javelinstrategy.com/research.

Consumers can test their identity fraud knowledge and receive tips on how to avoid fraud by taking the identity fraud quiz at www.idsafety.net