Paying Bills Online Fights Fraud: Report
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In a vote of confidence for e-commerce, paying bills online can help protect customers from identity theft, according to a report released Thursday by San Francisco-based research firm Javelin Strategy & Research.
The report, entitled "Online Banking and Bill Paying: New Protection from Identity Theft," alleged that simply by viewing and paying bills online, customers can save $4.8 billion in fraud costs each year.
At a time when the popularity of online banking slowly is gaining momentum, the report offered encouraging suggestions for overcoming a rise of fraud-related banking crimes. Federal Trade Commission statistics indicate identity theft victimized more than 10 million Americans last year, and cost businesses more than $47 billion. According to Javelin analyst James Van Dyke, by viewing and paying bills online, customers and businesses can eliminate one of the most common facilitators of these crimes -- physical bills delivered to their mailboxes and doors.
"More private personal content is being sent to mailboxes than ever before, with the average household receiving 20 paper statements and bills per month," Van Dyke said. "By receiving and paying bills online, consumers take the information out of their mailbox[es], and out of the reach of those who would fraudulently open an account or make unauthorized purchases on existing accounts."
Despite recent guidelines issued by federal bank and thrift regulatory agencies, financial institutions have been slow to develop programs to respond to incidents of identity theft. Van Dyke noted that these cases frequently costs an average victim more than 60 hours of personal time to correct, and more than $1,100 in out-of-pocket costs. He added that fraud costs business victims even more, and can total as much as $10,000 per case, or $32.9 billion annually.
As Van Dyke explained, consumers who view and pay their bills online are nearly four times more likely to monitor their transactions than those who wait for paper bills and monthly statements in the mail. Detecting and reporting fraud earlier can reduce identity theft by more than 18 percent, the Javelin report indicated.
Most companies still charge $5 to $7 a month for online bill viewing and payment services. While analysts say online usage has been slower to catch on than expected, many banks say they've seen a marked increase in people signing on during the past year.
"Clearly more and more people are doing it and finding it easier," said John Hall, spokesman with the American Bankers Association in Washington, D.C.
Hall added that he anticipates usage to continue to grow, especially if there's proof that online banking can reduce fraud.