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Identity Theft Rates Among Top Banks
Hugh Pickens writes "Consumers, regulators, and businesses lack objective tools to compare the incidence of identity theft across financial institutions and without such tools, consumers cannot 'vote with their feet' and choose safer institutions. Now a study by Chris Hoofnagle has analyzed 88,000 complaints submitted by victims to the FTC over a three month period in 2006 and found that Bank of America ranked highest of all firms in the study, with an average of 1,117 incidents over a three-month period. AT&T had 763 incidents, followed by Sprint Nextel, JP Morgan, Chase and its Chase and Bank One, and Capital One. When the estimated events are divided by the total deposits, the data show that HSBC, Washington Mutual, and Bank of America have the highest rates of identity theft. Hoofnagle said lending institutions should publicly report information about identity theft events such as the rate of identity theft; the form of identity theft attempted; whether it was a mortgage loan or credit card; and the amount of loss suffered as a result. would help consumers choose safer financial institutions. The full study(PDF) is available from the Berkeley Center for Law and Technology."
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You've missed the subtle twist in the process.
It used to be that if a bank lost money because someone defrauded them by pretending to be a customer of theirs it was their problem. But now, with the wonderful new term "identity theft", it's your identity that's been stolen and therefore your money. You may appear to still have your identity, and they may appear to have lost their money, but that's just looking at it too simplistically.
So remember; fraud = their money, identity theft = your money. Change the way you describe the crime and magically you change who's the victim. Isn't that clever?
They should have explained things a little better. When a card is charged, it's a two-step process: authorization and capture. At authorization, they've told the merchant "yes, this transaction can go through and we'll hold the money for you". A merchant can't undo an authorization. The money doesn't get sent until capture, usually a nightly process. If a charge isn't captured within a certain amount of time (24 hours to a few days), the bank rescinds the authorization automatically.
They should have explained that there was a chance the merchant realized their mistake and wasn't going to capture the funds. If you contacted the merchant and let them know the situation, they probably could have prevented capture too. But, if the charge ended up being captured, you would need to file a dispute.
As a merchant, this is the way I want things to work. If an authorization goes through, I don't need to wait until I have the money in my account to ship someone their order. If they could back out of an authorization before capture, the authorization would be meaningless and I'd probably see a lot more fraud.