IDENTITY THEFTISSUES AND OPPORTUNITIES

American Bankers Insurance Association Annual Conference

October 9, 2003

Presented By:Sherita Cox, Union Bank of California Insurance Services

Mike Owens, Coverdell & Company, Inc.Walter Grote, Travelers

WHAT IS IDENTITY THEFT?

Someone pretends they are you in order to commit criminal acts:

• Credit card fraud• Unauthorized phone / utility services• Unauthorized medical services• Bank fraud• Loan fraud• Obtain employment• Fraudulent documents (Drivers license, tax returns,

government benefits)

WHAT IS IDENTITY THEFT?

Identity Theft/Fraud is the fastest growing crime in America

• A recent FTC survey shows that last year alone 9.9 million people were victims of identity theft

• An estimated 27 million victims in the past 5 years• Previous FTC estimates were at 750,000 victims per

year and 30-40% annual growth rates• Significant under reporting in the past• A 6 fold increase in ID Theft complaint calls over 6 years• 42% of complaints are credit card fraud; 22% are phone

or utility fraud; and 17% are bank fraud

WHAT IS IDENTITY THEFT?

Identity Theft/Fraud is a costly crime• Victims, on average, spend 175 hours and

$1,000 out of pocket expenses to clear their names

• It takes victims an average of 2 years to remove an average of $18,000 in fraudulent charges from credit reports

• The FTC estimates the total costs of identity theft and fraud in the BILLIONS OF DOLLARS

WHAT IS IDENTITY THEFT?

Clearing your name is time consuming and frustrating• Until you can prove otherwise, you are responsible for

acts committed by a person who has stolen your identity• It can take over a year before a victim finds out their

identity has been stolen• Creditors are not easily convinced that debts are not

yours• Victims can lose their ability to obtain credit and financial

services• Victims can lose their wages through garnishment by a

collection agency or worse, lose their job• Victims can lose their driver’s licenses• Clearing your name can take several years

WHAT TO DO IF YOU ARE A VICTIM

• Act promptly• Document all contact you make with others regarding

your situation• Call the fraud units of all the credit bureaus to report the

crime and add a victim’s statement to your report• Contact all creditors ASAP by phone and in writing• Get replacement cards with new account numbers and

carefully monitor your mail and bills for evidence of new fraudulent activity

• Report the crime to the police with jurisdiction in your case

• Notify the local Postal Inspector

WHAT TO DO IF YOU ARE A VICTIM

• File a complaint with the Federal Trade Commission• Contact the Social Security Administration to report

fraudulent use of your Social Security number• Contact your phone company if your calling card has

been stolen or you discover fraudulent charges on your bill

• You may need to change your driver’s license number if someone is using yours as ID on bad checks

• Don’t give up until your credit is restored

HOW TO PROTECT YOURSELF

• Never give personal information over the phone, through the mail or over the Internet unless you initiate the contact or know who you are dealing with

• Shred all financial receipts before throwing away• Shred those unused credit card offers before throwing

away• Protect your PINs and passwords for your account• Carry only what you absolutely need• Pay attention to your statements and billing cycles• Protect your mail• Check your credit report from all 3 reporting agencies

regularly• Install a firewall on your personal computer

IDENTITY THEFT SOLUTIONS

Prevention and Detection:• Identity Theft prevention guide• Credit reports – to determine if someone has established

credit in your name• Credit monitoring – be alerted to new creditors or

changes to your credit report• DMV reports – to determine if any violations or accidents

from someone using your identity• Social Security Search – to assure no one is working

under your identity

IDENTITY THEFT SOLUTIONS

Fixing the Problem:• Credit card registration – automatic notification of all card

companies• Emergency Cash access• Counseling from ID Theft experts. Step by step

instructions on what to do.• Restoration service to clear up fraudulent information.

Assistance or complete service on behalf of the customer

IDENTITY THEFT SOLUTIONS

Insurance Coverage:• Lost wages as a result of time taken off from work to

deal with fraud• Attorney fees – Defending suits, removing civil or

criminal judgments, and challenging information in a credit report

• Notary and certified mailing costs • Fees for reapplying for loans that were declined due to

ID theft• Phone charges for calling merchants, creditors, banks

and law enforcement• Spouse protection – Joint accounts and separate

incidents affecting spouse

MARKETING STRATEGIES

ID Theft solutions are a natural product for a bank to provide their customers:

• The trusted banker relationship is the most logical source of ID Theft solutions for customers.

• Protecting the customer also helps protect the bank from fraudulent charges, reducing risk and cost

• The ID Theft programs have greater appeal to the middle to upper income customer segments vs. the lower to middle income customers target market for most direct marketing programs

MARKETING STRATEGIESOffers and Positioning:1. Straight offer of a complete program with credit

reports, credit monitoring, counseling and restoration, etc. with an amount of ID Theft Insurance included ($10,000 -$20,000).

2. Blanket ID Theft Insurance ($500 or $1,000 coverage) for all or selected customer segments (senior, platinum, etc.) provided by the bank. This adds significant value to the bank customer relationship at a very low cost.

MARKETING STRATEGIESOffers and Positioning:3. Blanket ID Theft Insurance w/ Voluntary upsell for

either additional coverage or a full program. This can offset the cost of the blanket coverage and generate revenue.

4. Customer Appreciation program ($500 or $1,000 gift ID Theft coverage) with the option to purchase additional coverage or a full program. Activation is required for the gift coverage (similar to Gift AD approach).

MARKETING STRATEGIESDistribution Channels• Direct Mail • Outbound Telemarketing Channels• Customer Call Centers / IVR• Statement Marketing• Credit Card or Debit Card Activation VRU applications• Offer in conjunction with Privacy Notice. Turns a

compliance communication piece into a customer relations and marketing device.

IDENTITY THEFTISSUES AND OPPORTUNITIES

Discussion & Questions???????