A new study conducted by Javelin Strategy & Research shows that while banks are good at handling credit card fraud once it has occurred, they could be doing more to protect their customers' information from hackers and to prevent identity theft.
The study ranked America's largest banks on a scale out of 100: 45 points for fraud prevention, 35 for detection and 20 for resolving problems after they've occurred. While the average for problem resolution was 18 out of 20, the scores for prevention and detection were much more troubling: only 24 out of 45 and 17 out of 35, respectively.
Biggest problem: social security numbers
What's the worst offense that could be easily solved to cut down on credit card fraud and ID theft? Believe it or not, the biggest problem is the way banks handle customers' social security numbers.
Even more dangerous than credit card fraud is the prospect of identity thieves gaining access to SSNs, which can be used in a number of very destructive ways. Despite the importance of safeguarding these vital digits, however, 70 percent of banks continue to use them to identify customer accounts, a practice that has been in place for years and has not been changed to deter hackers and identity thieves, as the victims of the recent hack on Citibank can attest.
Social security numbers are required when you open an account or request a loan, but they aren't being protected as well as most consumers probably assume - and that could easily be changed, says Javelin. Instead, says the study, account fraud totals $37 billion each year.
Bank of America scores highest in fraud protection
Despite this frightening news, there is a silver lining in the reports on specific banks. Bank of America scored highest in the study, ranking 87 out of 100 for its credit card security protocols. American Express, the biggest card issuer in the U.S. and widely known for its top-rated credit cards, received 66 points, while J.P. Morgan Chase, the second largest, earned 67.