Identity theft is one of the most pervasive crimes in modern society. In the United States alone, there are more than 16 million reported cases a year, costing Americans about $25 billion in direct and indirect losses, according to the Bureau of Justice Statistics. That comes down to an average cost of $1,769 a person.
Adding to the problem is the difficulty of proving that your identity was stolen and that fraudulent activities have occurred. The process of cleaning up damaged credit and recovering funds, if possible, can take years.
There are certain measures you as a consumer can take to prevent identity theft, like carefully monitoring your financial records and shredding all sensitive documents. But there are also technologies currently being developed and tested that could help curb fraud on a large scale; in fact, many countries have already started implementing them.
Here are three changes we’re hoping the United States will adopt soon to prevent identity theft.
1. RFID Security
A popular growing technology in credit cards is the radio frequency identification (RFID) tag. It’s basically a more advanced bar code; if you have a credit or debit card with this type of feature, you’ll be able to do things like tap your card on a reader — rather than swiping it — in order to make a transaction. While this form of payment means your card is protected from traditional credit card skimming devices, it also makes your card susceptible to hackers who could tap into the unique frequency and steal your information.
The security industry in the United States realizes RFID cards are vulnerable, but it hasn’t really done much to address this weakness. Stopping this kind of fraud wholesale would require the technology to be redesigned to include certain failsafes — countermeasures that make hacking an RFID card harder. According to a Florida State University study on the subject, this might include codes that randomize outgoing information or block intruders.
Instead, concerned consumers will have to turn to third-party devices to protect their information. There are a number of products available today that will either block the RFID signal or scramble it, making it more difficult (though not impossible) for hackers to swipe information wirelessly.
2. Two-Step Verification
A simpler form of identity protection that is becoming quite popular is the two-step verification process. This requires a user to sign into an account with both a password and a one-time-use, soon-to-expire code sent to his mobile phone. Social media has made this type of verification process more prevalent — and some banks are even starting to follow suit, such as Bank of America, which uses a program called SafePass.
That said, there is still a long list of banks and credit unions that haven’t yet adopted this relatively simple way of keeping intruders out of your bank account information. A widespread acceptance by American financial institutions — perhaps even making this type of security mandatory or at least incentivized — would surely reduce fraud.
3. EMV Technology
Americans might not be familiar with EMV — Europay, MasterCard and Visa — technology, but it’s used almost exclusively everywhere else around the world. This type of credit/debit card comes with a microchip making it a “smart” card that helps authenticate a transaction along with a personal identification number (PIN). On the surface, this so-called “chip-and-PIN” card might seem indistinguishable from the standard magnetic stripe that most people are familiar with, but there’s a huge difference. Mag-stripe information is easily copied by skimming tools, whereas a microchip greatly increases the complexity of the information.
EMV cards are currently only available overseas, but they’ll be arriving stateside this year, thanks to plans by MasterCard and Visa to update their security systems.
Staying one step ahead of identity thieves is a responsibility shared between financial institutions and their customers. Once major companies in the United States adopt these already popular technologies, consumers will be just a little bit safer. That said, technology is constantly changing, and there will always be a new system or feature to adopt. Perhaps American banks should set their sites on the next frontier: biometrics.