Banks Don't Protect SMBs From Fraud: ReportBy Channel Insider Staff | Print
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Small business customers aren't getting the fraud protection they need from banks and other financial institutions, and online attacks hit them hard.
Small and midsized businesses are more susceptible to online-banking fraud, compared with larger businesses and enterprises, according to a new security report from the Ponemon Institute. What’s worse is that many financial institutions are not doing enough to protect smaller businesses from cyber-crooks.
Over half, or 56 percent, of the surveyed companies reported experiencing some sort of banking fraud in 2010, according to the Ponemon Institute, which released its 2011 Business Banking Trust Study April 4. Of those companies, 75 percent said the fraud occurred online and 61 percent claimed to have been targeted multiple times.
The survey included payment fraud and account takeovers.
"Our research reveals continued bad news," according to the report. The financial industry "has not moved the needle" in addressing the security issues that would address account takeovers and other types of fraud "plaguing" SMBs and their banks, the report found.
The worrying thing about the increase in online fraud is that organizations are ill-equipped to detect these scams. The banks didn’t discover more than three-quarters of these security issues until after the funds had been transferred out of the victim’s account. About 78 percent of the businesses surveyed checked for potential fraudulent activity by checking their statement balances at the end of the month.
Banks were able to fully recover the fraudulently transferred funds for 10 percent of businesses, and took losses in 37 percent of the cases by reimbursing the businesses. Targeted businesses took a loss in 60 percent of the cases.
Being compensated for fraud-related losses can also be tricky. Only 8 percent of the victims claimed their banks fully compensated their losses, 29 percent had partial compensation and 31 percent said they received no compensation at all. Regardless of how they were compensated, 43 percent of the survey participants said they didn’t think the bank would cover any losses in case of fraud.
For more, read the eWEEK article: Banks Fail to Protect SMBs from Online Fraud, Report Finds.