ID Theft a Big Issue
For ABN Amro, the case of the missing tape might seem an all's well that ends well affair. Fortunately for two million of the company's mortgage customers, a tape containing sensitive information about their mortgage accounts that "went missing," as they say, turned up uncompromised. For a few days, ABN Amro found itself the subject of some unwanted attention after the company honorably announced the disappearance of the tapes. But interest subsided when the tapes were found.
For the next company that finds important customer data has potentially been compromised, the ending might not be so benign. Even before the ABN Amro tape got lost on its way to a credit bureau, the company was well on its way to developing an electronic, encrypted method of transferring the data. We suspect that in the aftermath of the affair, ABN Amro isn't the only company that's putting a renewed focus on data security. ABN Amro, with its candor about the loss of the tapes and its quick response, acted admirably throughout what was undoubtedly a difficult period for the company's servicing leaders.
Identity theft is a big issue in the minds of consumers these days. An act as simple as the theft of credit or debit cards can lead to big charges almost instantly, and the thieves are increasingly sophisticated about using stolen cards and card numbers and online commerce becomes more commonplace. The wealth of data in a loan-servicing database could be a goldmine for the worst, and most sophisticated, kinds of identity thieves.
As more and more consumers are victimized as part of some level of identity theft, pressure is growing on financial institutions to strengthen their security mechanisms. We expect that pressure to continue growing, and its effects will spill over into the mortgage arena.
With legislators and regulators - at both the state and federal levels - taking more interest in privacy rights, lenders will need to place an even higher premium on data security than in the past.
And as more consumers become victims of ID theft, you can bet they will put more pressure on their financial service providers to protect information and quickly safeguard compromised accounts. Working with the government and the credit bureaus, lenders need to make sure that they are helping combat ID theft any way they can.
(c) 2006 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com