Link: TowerGroup
The financial services analyst continues to weigh-in on the estimated losses due to phishing and identity theft, with the latter becoming a catch-all for all financial fraud. Estimates from the FTC, Gartner, and Javelin have run into the billions.
Many media outlets have jumped on these estimates and made the incorrect leap that the losses were due solely to online fraud and phishing. Now, much more slowly the story is emerging that the actual online portion of these fraud losses is much smaller. Some even argue that online banking has reduced the total amount of fraud since consumers are able to pay closer attention to their accounts.
TowerGroup's latest report on phishing losses pegs the 2004 loss at $140 million worldwide; or about $1 per online banking household. That's still a big number, and one that seems a bit high in our view, but it's far less than the billion-plus implied by Gartner earlier this year. It's also much less than the $500 million figure (for US only) recently released by the Ponemon Institute in a study commissioned by NACHA and Truste.
So is the online channel a help or detriment to the age-old battle against crime? From a monetary perspective, we believe it's been a net loss so far. As Tower pointed out, it's not just the actual losses, financial institutions spend far more in prevention and detection than they lose to the crooks.
But long-term, we are absolutely convinced it will be a much safer environment for banking compared to the paper-intensive processes it replaces.
-- JB, [email protected]
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