Fighting the Good Fight

Deputizing cardholders to stop fraudsters

By Jim Ghiglieri

If cardholders are a community bank’s first line of defense against major fraud losses, it stands to reason they should be armed with more sophisticated weaponry. Fortunately, advances in technology and a more acute consumer awareness of the consequences of card fraud have combined to bring about change.

The empowerment of consumers to protect their own card accounts couldn’t have come at a more opportune time. As the popularity of debit cards continues to soar, fraud incidents also rise. Debit card fraud, in particular, is increasing and is predicted only to build further as counterfeiters weary from the global EMV standard set their sights on the United States. With the vulnerable magnetic stripe still omnipresent in our country, fraudsters around the world are coming to see American plastic as a virtual goldmine.

Beyond satisfying consumer demand for 24/7 access and control of their accounts, at least one other factor is motivating card managers to deputize cardholders in the fight against fraudsters—and that’s regulation. The unknowns surrounding the Durbin Amendment’s debit interchange pricing cap and predicted regulation on overdraft programs have community bank leaders searching for as many ways as possible to manage the costs of their popular debit card programs.

Among the new and emerging tools available to cardholders are fraud alerts. Delivered via email or text, fraud alerts command consumers’ immediate attention when something fishy is detected on their accounts. Some of these tools are powered by the bank’s back-end fraud strategies; others are driven by parameters customized on an individual basis by cardholders themselves.

Another option available to banks for little to no upfront cost is identity theft protection, an ever-increasing threat to all Americans. Some estimates show nearly 15 million U.S. residents have their identities used fraudulently each year. Financial account takeover can be an early indicator of identity theft, which makes consumer-facing detection and prevention tools all the more important today.

Some community banks are taking protection of their consumers a step further, however, by rolling out protection plans. Priced low enough to allow banks to turn a profit, these plans give customers access to licensed investigators with limited power of attorney who work on their behalf, saving them the time and the money needed to resolve identity issues.

Community banks have worked for years to educate customers on ways to protect their personal and financial information. From taking simple steps such as shredding documents with account numbers and other identifying information, to raising awareness of phishing and vishing scams, they have and continue to help customers take steps to keep their money safe and their identities intact.

Fighting that good fight is becoming just a bit easier, however, as these new tools and programs allow customers to take a more aggressive stance in their own protection.

Jim Ghiglieri (, a former community banker, is senior vice president, relationship development for the SHAZAM Network in Johnson, Iowa. He helps the network focus on representing the voice of community financial institutions in the electronic payments industry.